France-based Portway Capital, who came under fire eighteen months ago for the swift implementation of several, well-publicized changes to their investment strategies, were tongue-in-cheek about the difficulties in a recent letter to customers and shareholders alike.
The strategy shift last year was to “get out of the dollar”, and to do that effectively Portway Capital had to move fast – thus prompting calls of foul play by unconvinced investors. Today Portway Capital are pointing to a 15% gain in the Yen vs the Dollar in the last 12 months, as key evidence that the strategies and were correct and that their swift execution was essential for maximum gains.
Furthermore, there is now a substantial amount of chatter to suggest that Portway Capital are ready to increase their Yen exposure; BOJ’s new governor, Masaaki Shirakawa, is seen as more hawkish than his predecessor and with The Bank of Japan reluctant to keep interest rates at a negative level, after accounting for inflation, all factors seem to point to further Yen gains in the short-term, according to Portway Capital.
These figures, when applied to economies such as the US and Eurozone, would be considered astronomical, but analysts at Portway Capital are looking at the bigger picture; consumer price rises (due in part to a recent 18% hike in fuel costs), coupled with a substantial slowdown in external demand (due to the US housing recession), and above all, a developing, labor-intensive nation of 1.3billion people (who cannot switch flexibly from relying on exports to domestic domand), necessitate a revision of the benchmarks. For this type of model, the analysts at Portway Capital have apparently determine that an economy can be considered in recession at growth figures of 7.5-8.0%.
Although Portway Capital declined to comment on the speculation, a source close to the firm stated that their expected timeline for a public shift in policy from the Chinese Central Bank (which may be the catalyst for a downturn in the Yuans gains) would not be expected until after the Beijing Olympics.

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