The elder Aitken nails Australia

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From the AFR:

James Aitken, the elder brother of high profile stockbrokers Charlie and Angus, has been consulting to some of the world’s largest investment funds and policymakers via his firm Aitken Advisers since leaving UBS in 2008. Before that he worked at insurer AIG at its infamous derivatives unit.

…In China, all is not as it appears, says Mr Aitken, whose analysis Notes from a Small Island is despatched to his exclusive and still growing list of the world’s most sophisticated investors and policy makers.

“People are getting ‘head faked’ by the slow down in credit growth but total lending is well higher,” he said.

Credit is being channelled through alternative sources, such as the bad banks and a new vehicles modelled on those used by the Federal Reserve.

…Mr Aitken says it’s a case of “China fine, Chinese suppliers not so fine”. Australia is facing an awkward moment.

“The Reserve Bank of Australia has been right to have a balanced view and so far we have muddled though but it gets trickier from here. It gets trickier.”

“The housing card has been played and what’s next, I am not sure. I don’t think they are either,”

…“Now is a wonderfully opportune moment for Australian funds to think about their exposure to offshore assets and if the AUD has conclusively topped out then doesn’t it make sense to increase exposure to offshore assets?”

They don’t have a bloody clue. This thesis is exactly right.

Comments

  1. It is indeed a perfect time. I started preparations to do that with my work to ensure I had a predominantly but balanced overseas exposure a few years ago when I started reading this blog. Now I am thanking my lucky stars that I followed a link from a Fairfax article you guys wrote. I might have started a bit earlier however I have a lead time before realising income and it is all coming together nicely. Thanks to you all.

  2. Anybody have any thoughts about Platinum Asset Management ASX: PTM as a way to invest funds overseas. They are all international with their investments.

    • You would put money in their global funds – not buy the ASX company stock which would suffer considerably in a local downturn.
      They have unit price history available on their website.
      It would be interesting to graph the unit prices vs currency fluctuations to see how much impact this has.
      A bigger factor on unut price would be the flow of local capital into and out of the funds?
      Or is it solely determined by the value of the assets held in trust – which being overseas in overseas currency – should be fine.
      Trust funds aren’t my strong point….

      I would love to know more about how the unit price is determined…

      • I think it is the latter. They buy if capital comes in and sell if it goes out (assuming it is above their buffers).

    • It’s ok. I’d look at Platinum International Fund personally. It has a proven long term track record. You should be willing to park your money here for 10 – 20 years. Alternatively you could buy ETF’s for the American 100 and 500. I favour Platinum atm as the US stock market is somewhat overheated i would think and Platinum can find value elsewhere overseas, and it has an excellent track record of doing so over very long time frames.

  3. “People are getting ‘head faked’ by the slow down in credit growth but total lending is well higher,” he said.

    Credit is being channelled through alternative sources, such as the bad banks and a new vehicles modelled on those used by the Federal Reserve.

    Growth model not done just yet……They will never stop… Rapid credit growth will continue and keep getting more and more opaque until at some point it is all too late. It may be too late already.