15 October 2024
RUFFER INVESTMENT COMPANY LIMITED
(a closed-ended investment company incorporated in
(the "Company")
Attached is a link to the Monthly Investment Report for September 2024.
http://www.rns-pdf.londonstockexchange.com/rns/1172I_1-2024-10-14.pdf
The fund's positive return in September was almost entirely accounted for by one theme: Chinese equities, which rallied by 25% in just over a week. Correspondingly, rather than attempt a tour d'horizon covering geopolitics and the Federal Reserve, this month's note will focus on
Let's begin with the setup: how did we get here?
Faced with a slowing domestic economy, they couldn't hike rates, and so the renminbi weakened by some 15% against the dollar in 2022 and 2023. What they really wanted (and what their economy needed) was to cut interest rates, but in an environment where all other central banks were hiking, they could not do that without suffering either significant capital outflows or a weaker currency.
They did slightly reduce interest rates (the People's Bank of China's repo rate declined from 2.2% in 2022 to 1.8% by this summer) but even those small cuts saw problems emerge: gold demand in
Rising real yields imposes pain on any asset that has leverage or duration, and real estate (which has both) suffered accordingly, with government policy making the problem worse. Equities are a duration asset, and unsurprisingly the equity market in
We initiated a small position in
So why have all Chinese markets suddenly rallied? A July interest rate hike by the Bank of
Saying goodbye is death by a thousand cuts, and we see no need to say goodbye to the portfolio's
Enquiries:
Sanne Fund Services (
Tracy Holloway
Email: RIC@apexfs.group
LEI: 21380068AHZKY7MKNO47
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