Foord Asset Management’s Brian Arcese is sceptical of the sharemarket rally lasting but remains bullish on China.
Will January’s sharemarket rally be short-lived?Inflation and interest rates will be the two largest determinants for market returns this year. While goods inflation has rolled, services inflation continues to march higher. The Fed and other central bank officials will continue to watch wages and labour markets closely when determining the forward path of interest rates.
The tech share price volatility presents great opportunities to accumulate names that will consolidate their respective industries in the absence of irrational competition from VC-backed start-ups. But we have to be mindful of the dead cat bounce.JD.com. We see this as a core e-commerce business that will see continued top-line growth driven by Chinese consumption and rising e-commerce penetration and even faster bottom-line growth as margins expand from the low single digit to mid-single digit.
We are not benchmark focused, although we do present performance against the benchmark for comparison purposes. The largest detractor from the fund’s investment performance has been underweight in expensive US markets and overweight to attractively valued Chinese platform technology firms.Importantly, our view is that this overweight/underweight is relative to the MSCI ACWI which, despite being the most widely used, is not a foolproof benchmark.
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