Exports are still a key part of economic growth in Asia

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Thomas Mengel, who is manager of the Ivy International Growth fund, has been trimming positions in mining companies and puttingthe proceeds to work in sectors that feature "more stable earnings,less volatility and less economic sensitivity."
His preferred stocks are concentrated in Europe and includeproducers of consumer staples, like Nestlé, the Swiss foodcompany, and Reckitt Benckiser, the British supplier of householdgoods.
He also likes utilities, which he considers a safer way than oiland gas companies to play the energy boom. Among his selections areFortum in Finland, the German company E.ON and National Grid, whichcontrols electricity distribution in Britain.
Emphasizing the need for safety, Mengel warned that the globaleconomy "is walking a tightrope."
Hallett at Harding, Loevner has been preparing for turbulentconditions by investing in companies that he expects to maintainprofit margins, even if the costs of commodities and other rawmaterials continue to rise and consumer spending remains sluggish.
He prefers enterprises that operate in nooks and crannies withinbroader sectors, most notably health care, which he expects tothrive as the population ages and, gruesome as it may sound, needsmore spare parts.
He recommended three Swiss companies: Roche, the drug maker; Alcon,the provider of eye-care products; and Nobel Biocare, a maker ofdental implants. He also suggests Cochlear, an Australian businessthat makes ear implants.
"What we like in this environment are companies with pricing powerand strong competitive positions," Hallett said. "You can either bethe low-cost guy and compete on price, or you can find a niche andfill it."
Explaining his affinity for this particular niche, he said: "We'reall living longer and starting to fall apart. The habits of youthare catching up with us as we live longer."
The once-emerging economies of Asia are not as young as they usedto be, either, but they are hardly on the verge of collapse. Theirnew maturity has provided healthy diversification, making them lessdependent on exports to the West, said Alexander Muromcew, amanager of Asia portfolios for TIAA-CREF. But the region is notimmune to global weakness, and he is adjusting his portfoliosaccordingly.
"I'm cautious," he said. "I still think we're going to see continued weak numbers from the U.S. consumer, and exports arestill a key part of economic growth" in Asia.
He is concentrating on sectors that should benefit from domesticdemand. He especially likes communication companies, includingAdvanced Information Services, a provider of mobile phone servicein Thailand, and the Philippine Long Distance Telephone Company. Hefinds them havens in threatening times.
"You can sit back, collect a 6 to 7 percent dividend yield andsleep well at night," Muromcew said.
His other favored group may make some investors toss and turn. Helikes commodity producers, even after their enormous rally, whichhe expects to be sustained by Asia's industrial boom, which so farhas been relentless.
Examples are BHP Billiton and Rio Tinto, two iron ore miners, andtwo Japanese conglomerates with large metals operations, Mitsui &Company and Mitsubishi Corp.