A key risk Australian equity investors need to be aware of is the impact of the falling $A

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A key risk Australian equity investors need to be aware of is the impact of the falling $A; for us it's less about the magnitude of the fall and more about the speed of its descent. Retailers and wholesalers importing product from Asia (denominated in $US) are seeing rapid increases in their sourcing costs and in most instances they want be able to raise end prices quick enough to offset the cost inflation. We believe this will crimp profit margins and likely lead to profit warnings over the year to come. Despite many of these companies currently appearing cheap we are not tempted to buy them until the full implications of the currency disruption have been felt by the businesses. @pengana


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