VIEW-Worst is yet to come for equities, says Manek fund

By Simon Falush

LONDON (Reuters) - Stocks may look cheap in historical terms but the current downturn is different from those in the past and markets have further to fall, the manager of a small fund often labelled a maverick told Reuters.

Jayesh Manek, a 52-year old pharmacist-turned-fund manager started the Manek Growth Fund after twice winning an annual fantasy share competition in the Sunday Times in the mid 1990s, is bracing for further hefty falls in equities.

"There are a lot of buyers out there who feel that the market is at good value here, but we have got to remember that this downturn might be different to others, because the financial sector is at the centre of it," he said.

While many analysts argue that cheap valuations suggest now is a good time to buy, Manek said this was a dangerous game to play.

"A lot of commentators feel valuations are very attractive but one has to remember that analysts are very slow at downgrading or reducing forecasts for companies," he said.

"If you're looking a year out, then we'll see profits that are much less than what they are forecasting -- if you take that into account, valuations are not that attractive."

"There are no hiding places so the idea is to keep onto quality companies, ideally with little debt or net cash positions," he said.

As well as the classic defensive pharmaceutical stocks such as AstraZeneca and GlaxoSmithKline, semiconductors are a sound longer-term investment in the current climate, Manek said.  Continued...