Why Martin Currie's Reece Birtles is bullish on Flight Centre, and cautious on iron ore, banks and AI
Having been burned by hype cycles before, Martin Currie Australia’s CIO sees a steep correction coming for both Australia’s biggest export and an overbought tech sector.
Fresh off a trip to China earlier this month, Reece Birtles brought back some big concerns about the trajectory of the iron ore price and its consequences for Australia.
“It was evident how serious the property issues are in China. They're in an overbuilt situation so it's about controlling the downside risks at this point,” the chief investment officer at Martin Currie Australia told Capital Brief.
“Given the excess steel capacity that China has at the moment, I think that that has very significant implications and makes it a very difficult space for iron ore prices going forward and for iron ore stocks.”
While the iron ore price has come off sharply, falling from USD143 a tonne at the start of the year to around USD107 today, Birtles thinks the reality isn’t priced in as China struggles to export excess stock. With BHP and Rio Tinto helping drive the index – alongside the exceedingly expensive big banks – he sees a broader index risk developing.
