FUND VIEW-Central Asia bank stocks seen offering value

LONDON (Reuters) - Banking stocks are among the most attractive in central Asia at present with the industry set for strong growth in the years ahead, Ravshan Yunusov of Ansher Fund Management said.

Yunusov, who manages the Ansher Regional Equity Fund, has 19 percent of his portfolio in bank stocks, the fund's largest sector exposure.

The region's banking industry is under-developed and undervalued, particularly in Uzbekistan, Yunusov said, where many banks trade on a price-to-book ratio -- market value divided by total assets minus intangible assets and liabilities -- of between 0.7 and 1.2.

Bank assets in Uzbekistan grew 27 percent between January and September this year.

The fund, which has assets under management of $21 million (13.4 million pounds), invests in a range of sectors in central Asia including oil and gas, metals, consumer, food processing, and telecommunications.

It also takes short positions in internationally-listed securities of companies with operations in the region and was up 13 percent year to date at the end of September.

The region, which has 5 to 7 percent of the world's natural resources, is becoming increasingly economically diverse, Yunusov said.

The second largest sector exposure of the fund is in telecoms, which Yunusov said, is also under-developed in the region.

Pascal Buschor, business development director of Ansher, said mobile telephone penetration in Kyrgyzstan and Tajikistan is about 2 percent but over the past three years penetration in Uzbekistan has grown to 40 percent from a similar level.

The fund invests in companies on price-to-earnings ratios as low as 1 and will often play an active role in helping the company to grow. "We invest in the tip of the iceberg and seek to unlock the hidden potential of companies," Yunusov said.

In recent weeks, the fund cut its exposure to Kazakhstan, the region's most developed market and largest economy, to 3 percent from 15 percent. Kazakhstan is refinancing its foreign debt and with its heavy exposure to mining and energy is less diverse economically than others in the region.

Buschor said the market is reaching attractive valuations following a 60 percent decline this year and expects to rebuild exposure to Kazakhstan during the first half of 2009.

(Editing by David Holmes)