Trade war hurts Platinum
Fund manager to post loss as China troubles bite
FUND manager Platinum Asset Management said its portfolio would post a paper loss in the first half as the USChina trade war unravelled big bets on Chinese and Asian growth, sending its shares lower.
The fund manager, founded 25 years ago by stock picker Kerr Neilson, dubbed “Australia’s Warren Buffett,” said it would post an unrealised loss on its investments for the halfyear to December 31.
It expects to collect little in the way of performance fees, and said funds under management fell about $100 million in December to $24.09 billion, for an annual drop of 11 per cent.
The warning underscores how far the firm’s flagship fund’s bets in east Asia – mainly in China which the company called “the investment opportunity of a generation” – have come undone as an economic slowdown and trade tensions have hammered stocks.
“I can see why they bought it (China). They’re contrarian, they like value and China was cheap,” said Chad Slater, joint chief investment officer at fellow fund manager Morphic Asset Management.
“I can see why they held it, so I wouldn’t begrudge the idea, but at the end of the day performance is what drives flows,” he said, although he noted Platinum’s outflows were modest in a tough year for managers.
Platinum shares fell more than 7 per cent to an 18-month low in early trade and have almost halved since a peak in February 2018, as its investments have stumbled and Mr Nielson stepped down as the fund’s chief executive. The broader market rose 0.5 per cent.
East Asian equities comprise about a third of Platinum’s flagship portfolio, with China the single largest bet.
In its most recent market update, Platinum said market weakness has been caused, in part, by China’s slowdown, triggered by financial reform and exacerbated by the trade war with the US.
Shares in the flagship fund’s top stock, Samsung Electronics Co Ltd, fell 17 per cent over the six months to December 31, while Chinese blue chips were hammered.
In Japan, the second-largest investment destination for Platinum’s top fund, the Nikkei ended the year with a loss of 10 per cent for the six months to December 31.