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Scottish Oriental's Rippingall keeps watchful eye on inflation

Scottish Oriental's Rippingall keeps watchful eye on inflation

Scottish Oriental manager Susie Rippingall is keeping a close eye on the risk of inflation.

After a dramatic rise in the minimum wage, Rippingall fears 'short term disruptions' could get in the way of increasing consumer demand, triggering a spike in the cost of goods and services.

Most at risk is South East Asia, while the likes of Taiwan and Korea may be more protected, while China sits 'half way in between', the respected Asia manager said.

'Where I see the risks [are] wage inflation, there's been quite dramatic increases in minimum wage,' Rippingall said.

As workers earn more, the Rippingall said higher wages have the obvious impact on consumption habits, pushing up demand for staples like noodles as well as luxury big ticket buys like cars and motorbikes.

But while this trend is positive and will help keep demand buoyant, meeting Asia's increased appetite could prove problematic.

'If the world can gradually increase its production of grain, sugar, soy and rice that is fine, but if short-term disruptions come through - weather related or anything else - inflation kicks off quite quickly,' Rippingall argued.

She added: 'If inflation builds up, central banks will be looking to move to raise interest rates, but they would much rather, as they have done in the past, follow the US.'

From April, Rippingall (pictured) will retire as manager of the £243 million investment trust, a move which will see Angus Tulloch  return to the vehicle, with  Wee-Li Hee and Scot McNab serving as co-managers.

Rippingall said that part of the transition process will see Scottish Oriental brought more into the 'First State fold' and for the first time it will be included in the investment house's asset allocation meetings.

Throughout her tenure, Rippingall has generated strong long term risk-adjusted returns and grown her portfolio's net asset value (NAV) by 104.2% over the five years ended in December.  Over the same stretch, the MSCI Asia ex Japan Index rose 23.2% and its smaller companies index by 19.5%.

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Angus Tulloch
Angus Tulloch
16/55 in Equity - Asia Pacific Excluding Japan (Performance over 3 years) Average Total Return: 17.58%
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