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Clunie: my shorts that play the China slowdown

by Emma Dunkley on Aug 13, 2012 at 13:58

Clunie: my shorts that play the China slowdown

James Clunie, manager of the Swip UK Flexible Strategy fund , has revealed his recent short positions put in place to benefit from China’s slowdown.

China’s GDP growth has tapered off, growing 7.6% in the second quarter versus previous rates of over 9%, and Clunie believes the country could be in for a hard landing.

In view of this, the manager has shorted companies he feels suffer from a slowdown in China.

‘Luxury goods – there is enormous demand out of China,’ said Clunie. ‘Mulberry is a luxury stock that did well in the late 1990’s. Luxury stocks do well when there’s quick wealth creation.

‘So with the correlation between China consumer spending and luxury property prices – it is a natural short.'

He added: ‘Mulberry has had a massive deceleration. Burberry has also slowed down – growth isn’t coming out as well as they’d hoped.’

Earlier this year, Mulberry shares soared to £25 and now hover at around £14. Clunie said he shorted this firm at £20 and then added to his short, in the view it was ‘massively over-priced.'

Clunie has also shorted mining firms Rio, Antofagasta, and Anglo-America on the back of China’s slowdown and in belief this will get worse.

‘China residential property has been in a big bubble – transaction levels have collapsed, and China’s growth is cooling,’ added Clunie.

However, Clunie conceded shorting is tough and has lost money shorting SuperGroup and Admiral ‘too early,’ even though the stocks halved after he shorted.

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