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Funds News

Credit Agricole sees value in risky assets

LONDON (Reuters) - Some risky assets hit by the fallout from the U.S. subprime crisis offer attractive opportunities for investors, according to Credit Agricole Asset Management London’s chief executive Bruno Crastes.

“In the wake of this crisis there are many opportunities. We are on the optimistic side of the market ... The real economy is very strong and should be able to cope with financial disturbances. As the intensity of the crisis fades out equity markets should recover,” Crastes, who is also chief investment officer, said in a recent interview.

“We slightly reduced risk when the crisis began. Now we are in the vicinity to buy a bit more risk. Some currencies and some of the equity markets are cheap ... There is value in risky assets.”

He declined to name individual assets he was looking to invest in.

Stock and credit markets have been hit in recent weeks by fears a surge in defaults in the U.S. subprime sector -- which lends to risky borrowers -- could develop into a wider financial crisis.

The FTSE 100 .FTSE index, for instance, which traded above 6,700 last month, fell below 5,900 last week, although it has since recovered to above 6,200.

However, Crastes said fears the crisis would hurt underlying economic growth were overdone.

“This is not a credit crunch, but a credibility crunch ... Liquidity is still ample in the markets.

“This is something that shouldn’t damage the state of the real economy .... The Fed has the ability to sort out the problem.”

However, not all investors take such a positive view on the outlook for markets as the credit squeeze plays out.

“The extent of the sub-prime mortgage market problems are still not known, and will not be known for some time,” Patrick Armstrong, a fund of funds managers at Insight Investment, said in a note emailed to Reuters.

“Uncertainty also has the potential to change spending patterns, and capital decisions. A risk premium is returning to asset classes, which is healthy, but we suspect this will be drawn out for some time.”

Credit Agricole Asset Management London ran 49.4 billion pounds in assets as at end-March.

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