G. Paul Matthews Sees Riches in Asia

We were concerned about the pace of growth in consumer credit in the first half of last year, and we're encourage that it has slowed significantly in the second half. In terms of Korea's overall consumer debt, it still appears to us to be manageable, particularly when compared to developed countries.

5. Samsung is one of the largest companies in the emerging market world. How have they managed to perform against developed-market rivals?

The key areas for Samsung are memory chips; telecommunications, especially handsets; and white goods. I think in the global competition in DRAM, they've benefited from having a broader business than their direct competitors, which have been totally dependent on DRAM. In recent years, when DRAM has been weak, they have been able to make up for some of it with their telecom business.

They have executed extremely well over the past few years. In the post-crisis environment, they have focused very clearly on their core businesses and have avoided their distractions that they were exposed to in the past. They have also been particularly successful in China.

6. Valuations in many Asian markets are lower than markets in developed nations. Would you define this region as cheap?

Asian markets are at the low end of their valuation range, and that's driven as much by the aftermath of the Asian financial crisis as any other factor.

There is one other particular thing affecting these markets -- the failure of Japan to recover from its prolonged recession. That has put a damper on multiples elsewhere in the region.

7. Speaking of Japan, it seems to be a perennial headline that the country is working to emerge from its recession. What do you make of the latest efforts, and is the country at all attractive as an investment opportunity from a one-, three-, five-year time horizon?

I believe at the end of the day that any economic recovery in Japan will depend on monetary policy being aggressive enough to achieve it. I'm encouraged that over the last few years the Bank of Japan has become increasingly aggressive in its approach to ending deflation. However, it has still clearly not done enough.