Question: What is the effect of currency fluctuations for an Australian listed company such as Brambles with $US earnings?
Answer (By Paul Rickard): Yes, Brambles (BXB) will be a big beneficiary of a weaker Australian dollar.
In the first half, only 7% of group sales were in Australia – the bulk in the USA and Europe.
While they have offsets to the currency, in that most of the borrowings are denominated in US dollars, you will see that they don’t generally hedge and prefer to report on a “constant currency” basis. That said, net profit goes up when the Aussie dollar falls, and falls when the Aussie dollar rises. This is one of the reasons why Brambles has spiked higher in the last month.
Question: With the recent falls in Asian stocks I was hoping to see if you were aware of any solid ETFs or LICs that may be worth looking at for future rebound?
Answer (By Paul Rickard): Here are a few to consider:
Ellerston Asian Investments (ASX: EAI) – listed investment company
Platinum Asia Fund (ASX: PAXX) – quoted managed fund
PM Capital Asian Opportunities (ASX: PAF) – listed investment company
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