Prefers water-related infrastructure stocks over utilities
* Wary of Chinese solar stocks; prefers wind sector
* To launch new eco fund by end of year or early 2010
By Leonora Walet
HONG KONG, May 12 (Reuters) - Water infrastructure stocks such as Flowserve Corp <FLS.N> and Geberit AG <GEBN.VX> are a good bet to capitalise on growing investment to address water scarcity and wind is more promising than solar, a fund manger said.
Stocks of water companies that make pipes and meters are good investments for the long term as governments look to conserve the prized resource, said Philip Seong, who helps manage $370 million in green-themed funds at Samsung Investment Trust Management.
"In 30 years, water will be the most precious resource," Seong told Reuters in a phone interview. "Water scarcity will push industries and economies to review their water infrastructure, so there will be a very big market for it."
Samsung Investment, which manages $100 billion worth of assets, is a unit of Samsung Group [SAGR.UL].
The $270 million Samsung Investment Trust Water Fund owns stakes in energy systems company Roper Industries Inc <ROP.N>, environmental engineering firm Tetra Tech Inc <TTEK.O>, and French utility giants Suez Environnement SA <SEVI.PA> and Veolia Environnement <VIE.PA>.
Within the water sector, Seong said he expects limited upside for utility stocks because of investor concerns that governments will hold back on water price increases amid a global recession.
Since its launch in April 2007, a euro-denominated version of the fund fell 26.4 percent by the end of March, broadly in line with the MSCI World Index <.MIWD0000PUS>.
SOLAR SUBSIDY
Samsung's other green fund, the $100 million Alternative Energy Fund Trust Account, was down 33.7 percent since inception in June 2007, underperforming the MSCI index's 29 percent fall.
Solar stocks should be approached with caution, given the sector's heavy reliance on government subsidies, said Seong.
"I'm more optimistic about wind because solar still needs subsidies to be competitive," he said.
Seong favours Denmark's Vestas Wind Systems <VWS.CO> and American Superconductor Corp <AMSC.O>, which makes wind turbine equipment.
"It gets 80 percent of its revenue from China. So it benefits from growth within the U.S. and China," he said of American Superconductor.
Among solar stocks, Seong prefers U.S.-based First Solar <FSLR.O>, which he reckons will benefit from President Barack Obama's drive for alternative energy development. He likes Chinese solar companies least, saying their stock prices are highly volatile and trading volumes relatively thin.
Seong, who co-manages the funds with KBC Asset Management, said Samsung planned to launch a new fund before the end of the year or early next year focused on energy efficiency and smart grid stocks, and including some waste control firms.
"Energy efficiency, R&D (research and development) and smart grids are emerging themes in the clean technology sector which are good long-term bets," said Seong, declining to give examples of potential investment targets.
Smart grid is a technology that promotes the use of intelligent meters to monitor electricity use while energy efficiency companies offer services aimed at cutting electricity use in buildings, malls and homes.
Samsung Investment closed a similar fund in February, the $10 million Global Eco Fund, due to weak market conditions. The fund was launched in 2008.
