Shares in asset manager Platinum Asset Management Limited (ASX: PTM) plunged up to 9% this morning even though the global equities manager failed to provide any news to the market.
The stock is falling on the back of weakness in international markets triggered by the determination of U.S. President Trump to renegotiate trade tariffs with China, Canada, and European countries among others.
Higher trade barriers are likely to lead to a global slowdown as gross domestic product growth is linked to nations' ability to freely trade with each other. Over the medium term you don't get share price growth without GDP growth, with leading U.S. indices like the Dow 30 and S&P/500 losing ground for most of the last month.
President Trump has also threatened to impose an additional US$34 billion of tariffs on Chinese goods from July 6 unless it agrees to meet some of the construction tycoon's trade demands. In response China is reported to be preparing more tariffs of its own as its stock markets enter a bear market on the back of the trade dispute.
Asian markets in general have been under heavy pressure with Platinum's funds heavily invested in the region. As at May 31 the group had $27.8 billion in funds under management, with its Platinum Global Fund delivering returns of 8.3%pa over the past three years net of fees.
Investors are probably selling the stock today in anticipation of a bigger correction ahead if the trade war escalates as U.S. markets are closed tonight for the July 4 holiday.
Fund manager Peter Lynch once said more money has been lost by investors attempting to anticipate corrections than in the corrections themselves.
As such I'd suggest today may be a good day to buy Platinum stock if you are keen on the group, valuation and business model.
Other more domestically focused fund managers such as Perpetual Limited (ASX: PPT) and WAM Capital Limited (ASX: WAM) are faring much better to be no more than down 1%.
