Consumer electronics retailers are among those most likely to be affected by the falling Australian dollar, according to research conducted by Credit Suisse.With the Aussie dollar falling sharply over the past month, retailers including Harvey Norman, Dick Smith and JB Hi-Fi could be feeling the pinch.
As reported by Fairfax Media, in conducting the research analyst Richard Hitchens tweaked the capital asset pricing model to determine the sensitivities of a stock to changes in the exchange rate.
Stocks tending to outperform the market when the dollar appreciates, and conversely underperforming upon depreciation, were labelled in the formula as ‘high AUDUSD beta’, with companies that sell a lot of imported stock featuring heavily.
This includes JB Hi-Fi and Harvey Norman, which come in at 13 and 34 on the list of 39, respectively.
CMC Markets analyst Ric Spooner told Fairfax electronics retailers would be particularly hard hit.
“It’s a little bit clouded there, though,” Spooner noted. “Prices go up, so people are inclined to buy less of their product, but that might simply offset by the increase in margin they can put on the goods – they can grab an increased profit share.”
Spooner further told Fairfax once the dollar starts falling below 85 cents to the 75-to-85 US cent level, that “turns more into a spectrum of being really happy days for exporters and those who benefit from a weak dollar”.
Amid predictions the dollar will fall further, retailers will be hoping consumer confidence holds firm leading into the Christmas trading period.
At a domestic level, despite fragile consumer confidence and flat August retail figures, Dun & Bradstreet’s latest Business Expectations Survey has revealed an air of optimism among Australian business owners, with retailers and the services industry lifting forecasts for the trading period.