Weekly Impressions

Sam Ferraro

Global Founders Funds Management

In the second weekly wrap of top-down and bottom-up developments during the reporting season, I discuss the PBOC’s rationale for devaluing the CNY/USD rate. Although the devaluation confirms that the authorities remain concerned about the state of the economy, this in itself is hardly new news. The peg to the dollar had seen the yuan appreciate by 25% on TWI basis over four years, and the devaluation now returns the yuan to the level that prevailed in late 2014, hardly a harbinger of a currency war. The PBOC is right to re-align the currency with the economy’s cyclical slowdown. In stock news, investors should avoid REA in the short-term because APRA’s macro-prudential policies will be associated with a slowdown in credit growth to investors, a key driver of higher housing turnover and real estate listings in recent years. And a key lesson from Ansell’s earnings miss is that investors need to beware that other globally dispersed, other complex firms could deliver an untimely earnings torpedo, particularly for those that have poor management quality and/or weak governance structures in place. (VIEW LINK)


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Senior Portfolio Manager
Global Founders Funds Management

Managing Director of Global Founders Funds Management, Sam has over 20 years experience in financial markets, with Merrill Lynch, JBWere and Goldman Sachs.

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