Telecommunications is favoured by Kristof Bulkai at Thames River. He thinks prospects in this sector are good as high-speed broadband needs expanding. On the flip side, he is easing off commodities.

Kristof Bulkai, co-manager of the Thames River Water and Agriculture Absolute Return Fund and the Isis Fund, believes telecommunications will be a good buy over the next two to three years. He is basing his prediction on the fact that telecoms is "the most hated and underweight sector. This is a good sign,” he said.

“I think there are big changes taking place,” he added. “It is not just a valuation and a contrarian argument. There are actually big changes taking place in the valuation of telecoms.”

On the mobile side he sees demand for data increasing with the use of devices such as iPhones and iPads used for “looking up data”. This, he said, is expensive and a new phenomenon. On the fixed-line side, corporate networks that have been bundled for the past 10-15 years are being unbundled by alternative operators. Coupled with this is the need for super-fast broadband.

“As a consequence we are likely to see not only a different profit environment for the operators but for the infrastructure guys who had nothing to do over the last 10 years. We’ll see a new cap-ex cycle. That makes us bullish,” he continued.

“Even if my thesis does not materialise, I’m buying into a sector where cash flow is good and companies will be able to meet dividends. So it’s not justified for them to trade at a higher yield than what you would get on your sovereign debt,” concluded Bulkai.

Looking at commodities, Bulkai believes markets are seeing the end of a big bull market and “going forward we will be more short than long”.

Bulkai also revealed he is “quite positive on China” as he believes inflationary pressures will ease and the country will outperform over the next six to 12 months, along with India and Brazil.