Which Shares Outperform When The Australian Dollar Rises?

Shares analyst UBS have a look at which shares Outperform when the Australian dollar rises. The analyst: The obvious way to measure a share's currency sensitivity is to look at its EPS sensitivity. However, the shares analyst note that this ignores what else is going on when the Australian dollar (A$) is rising. Given that the Aussie dollar generally trades like a cyclical stock, it turns out that cyclicals generally outperform and defensives generally underperform in a rising A$ environment, almost irrespective of their notional currency exposure. However, it is suggested that this time, the A$ is only rising because of an increasing possibility of a domestic rate hike versus slowing momentum in the US. However, this ignores the fact that the US is not the sole source of global growth (ex-US is very buoyant). In fact, recent movements have been consistent with our observation. The best performers according to the analyst (when the A$ is rising) include (in decreasing order) Lihir Gold (LHG), Oxiana (OXR), Zinifex (ZFX), Newcrest Mining (NCM), Oilsearch (OSH), Fairfax Holdings (FXJ), Sims Group (SIM), Australian Stock Exchange (ASX), among others. Worst performers include Lion Nathan, Woolworths (WOW), Resmed (RMD), Foster's Group (FGL), Westfield Group (WDC), Macquarie Infrastructure Group (MIG)among others.