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Beneficiaries of a stronger currency

Beneficiaries of a higher AUD include businesses that are consumers of US dollar denominated goods and services, or beneficiaries of an increased desire for foreign goods and services by Australian consumers. An example of the former might be retailers or certain health care providers, and the latter would be airlines and travel service providers.

LifeHealthCare (LHC) imports high-end surgical consumables and medical devices. Demand for LHC products is being driven by an aging population a steady stream of new technologies being introduced to the market. A substantial proportion of LHC product is sourced from the US, thus a higher AUD:USD would assist their gross margins if this move was sustained for a reasonable period.

Sectors that suffer from a higher AUD include all exporters, i.e. mining and oil and gas companies and most manufacturers. So care should be taken when assessing companies in those sectors, particularly if margins were already thin prior to an adverse currency move.

Disclaimer: Please note that these are the views of the writer and not necessarily the views of Perennial Value.

Sam Berridge
sberridge@perennial.net.au