From The Australian:
Goldman Sachs recommends profit taking on companies with US dollar exposure where valuations are most stretched, as it sees much less downside potential for the Australian dollar, which hit a 6-year low of $US72.60 Friday.
…“While they no longer screen as expensive, we see much less A$ downside in the near-term so would look to take profits in those names with US dollar exposure where valuations are most stretched,” he adds. Goldmans 12-month forecast for the exchange rate is $US0.67.
But while ASX-listed ‘offshore earners’ have been one of the strongest performers this year, up 19% versus 5% for the S&P/ASX 200, positive Australian dollar earnings momentum has seen their P/E multiple contract significantly, he notes.
As said previously, I support profit taking on this trade not because of valuations but given we’re approaching the end of the cycle, despite much further downside for the dollar.
