One of Australia's most renowned investors has branded US President-elect Donald Trump's pledge to "Make America Great Again" as "vacuous" and "frightening" in the context of China's rising economic might.
"This very Western-centric take on the world is frightening to me because it is so naive in the context of the rebalancing of world economic might," Kerr Neilson, the founder of $23 billion Platinum Asset Management said of Trump's jingoistic campaign slogan.
Mr Neilson and the board of Platinum fielded questions from shareholders in the funds management company at the annual general meeting in Sydney on Thursday about the recent share price fall, the decline in its funds under management and the rise on bonuses paid to its analysts.
"The folk who voted for Brexit, who voted for the right wing in America, are disenchanted and angry and we heard today about the remuneration payments here, I have a very clear understanding of that, but we are in a competitive world," Mr Neilson said.
"When we have these vacuous phrases like 'Make America Great Again', it's completely out of any economic or historic context. America has been great because it had the world to itself.
"We now have 3, 4 billion people in Asia who are tuned in because of mobile phones, TV, you name it, video. They're saying 'well why can't we have what others have?' So what are their leaders to do?"
'We're comatose'
Mr Neilson said China "absolutely smashes America" when measured by physical goods, producing more motor cars, eight times more steel and 10 times more cement.
"We're just comatose. We have no idea, particularly in the West, what's really changing. So we have all this debate, that's the politicians' hard sell. You can no longer make these silly promises and say 'we've got to be more equitable'," he said.
"Sure, it's a great idea, but in fact the place we're competing against, these other teams ... they play a very hard game. It's no good complaining about the referee."
Mr Neilson said "there has been a sugar rush from the Trump win and people are misconstruing what he can really do".
"You've got this problem of rates creeping up, the exchange rate creeping up, which is a form of tightening in the States, and yet there's no immediate stimulus," he said.
Recent movements in equity and bond markets, he said, were not just about Mr Trump, with growth in Asia accelerating.
"There is growth here, what we're not seeing is the type of interest rate environment you normally get," he said.
Mr Neilson said the fund was putting its faith in equity markets other than the US, which had "completely blitzed the rest of the field, partly supported by profits but also a re-rating".
"If you've got an exchange rate that's appreciating, that will tend to be an anchor on your profits. Whereas countries like Japan and Europe might well benefit from those exchange rate drops, it will be a matter of where you allocate."
Long-term aspirations
At the Platinum general meeting, Mr Neilson, chief investment officer Andrew Clifford and chairman Michael Cole took questions from shareholders, some of which expressed the concern about the share price, which had fallen 33 per cent over the past 12 months, as its funds under management fell 15 per cent.
Platinum shares fell 7.4 per cent on Thursday, the second-biggest fall on the S&P;/ASX 200 as the chairman told investors that revenues would be flat over the half year "if outflows were to persist and markets were to remain stable over the next few months".
Traders said Platinum shares had also dropped out of certain MSCI global indices, potentially prompting selling from passive index tracking funds. The company announced in September that it would buy back up to 10 per cent of shares over 12 months if they fell well below their underlying value, but said that as of Thursday no shares had been bought. Mr Neilson was asked for his thoughts about hedge funds that had shorted the company's shares on the view that it was not strong in marketing and would suffer further outflows as a result of below-benchmark fund performance.
"We have no qualms at all about people shorting our stock. In fact we do it to others, so we shouldn't be surprised," said Mr Neilson who described the shorters' analysis as "perfectly sound".
But he said the issues of costs, fund flows and rankings were short-term considerations.
"Our focus is on having the team to run this business ... for 30, 40 years. Some of the great firms, that started in the 1930s are stronger today than they have ever been," he said.
"We are in difficult markets, our job is to focus on developing the team and taking some outflows as the natural course of events."
Mr Neilson dismissed the extensive questioning about the rationale of a $3.6 million increase in costs, which largely related to bonuses paid to investment analysts, reminding the audience, that he, his staff, and an outside shareholder, Mr Neilson's former wife Judith, were majority shareholders in the company.
"Ask yourself why we would endeavour to pay the employees far more than they are worth. It's not likely."