SIMON BROWN: I am chatting with Nick Dennis, who manages the Anchor Global Equity Fund. Nick, I appreciate the time. You did a presentation yesterday around how the market is spooked. It’s actually weird. I was talking with a friend yesterday and saying to him, you know what, there’s certainly value out there, but the fear is frankly, I don’t know, at elevated levels.
There is plenty to worry about. Inflation has been sticky; you’ve got a tight fit. It’s not without cause that people are feeling cautious. But I guess my point yesterday was [that] to the extent that it’s positioned for and already expected, it’s less of a risk from an equity market perspective.SIMON BROWN: That’s a great point. If everyone’s out there expecting it and acting accordingly and worried, etc, it means it’s kind of in the price.
NICK DENNIS: I think I’m certainly not a structural China bull. I think there are plenty of reasons to be concerned. I probably also take the view that China, from my perspective, is more tradable than investible. This is not a set it and forget it decision. I would say shorter term there are some tailwinds. So I think you’ve got the tailwind from the economic reopening after the really draconian Covid lockdowns, and then the central bank wants to stimulate and is pumping credit into the market. So I think you’ve got a window where you could see earnings re-accelerating. From a tactical perspective there, I think the setup should be quite good.
A lot of these companies were never expensive; they were never cheap to begin with, but they did become ridiculously expensive.