We recently met with Andrew Clifford (Chief Investment Officer - Platinum Asset Management) to ask him where he believes the $AUD is heading in the medium term.
Mark Draper: Andrew, Aussie Dollar 74 cents, where do you think it’s going on a three to five year view?
Andrew Clifford: So we certainly think that, I guess it has become a fairly consensus view that the Australian Dollar can go a lot lower and we genuinely think that remains the case and it really just comes down to competitiveness that when we look particularly at labour cost it costs the range of industries, Australia just isn’t competitive now particularly with other develop markets, developed economies like Japan, Europe or the US. So we really think there is a lot more room for it to go lower. What I would caution though is that there are some positives remain, we are still one of the few developed economies which hasn’t seen our central bank print money with responds to housing or banking crisis so that is in our favour and it is the very fact that I said there are now many people who want to predict that the currency is going a lot lower would tend to make one cautious whenever you see that as investors we are all getting into the one position. So I suspect that at some point here we will actually shorter term not that such predictions are worth that much but I think that there is a real chance that the Aussie Dollar will go significantly higher before we actually see a further depreciation and what might cause that? I think simply any set of events that make people less concerned about, the prospects in China that the place will not have a very nasty or depression like term and it actually will come true this safely or indeed any sense that your representing a bit of this position. That general view of global growth I think will make people more comfortable owning the Australian Dollar in a short term since.
Mark Draper: And a medium term sense still comfortable ...
Andrew Clifford: And certainly we think Australian investors, while they have a little more exposure to off shore markets today then they have had, we still think that there’s are many people sitting there going oh well the Aussie Dollar’s already fallen a long way, that’s probably over and what we would think is on a medium to longer term, there is some way to go.
Mark Draper: Andrew, thanks for your thoughts. Much appreciated.
Andrew Clifford: Yeah, thank you.