Director‟s Cut --Digging deep -Macquarie Research,

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Director‟s Cut
Digging deep
The issue of corporate governance is ever present but is rarely tackled head-on.
Jake Lynch reminds us that corporate governance problems have been present
since the opening of China. But after years of living with the occasional blow-up,
the market is suddenly awash with accusations and small caps with even a whiff
of corporate governance concerns are seeing sharp share price declines.
In a detailed 120-page report, Jake discusses the problem and reviews some of
the techniques he uses to address the problem. These include grilling CFOs on
their ERP systems and gauging the extent of delegation within the organisation,
as it‟s easier to shuffle accounts when one person is running the show. The
alerts go higher the more complex the accounts, and he is particularly wary of
„growth by acquisition‟ stories.
In terms of positive factors to look for, he likes simple, focused strategies, teams
that combine old-timers and new blood from multi-nationals, robust ERP
systems, long-standing quality auditors and long track records. >> Read Report
Another report looking at the ESG side of financial analysis is Aimee Kaye’s
evaluation of employee engagement within Australian companies. The note
builds a comprehensive view of staff engagement across Australian companies
and the implications for investors. One of the key findings of her research is that
Australia‟s banks stand to make significant cost savings if they can reduce their
levels of staff turnover. >> Read


Highlights
 Rebecca Hiscock-Croft says US growth is slowing and inflation rising but we
are not headed for a period of stagflation.
 Max Layton remains bullish on copper through the second half; our top
copper picks are Freeport (FXC US) and Jiangxi Copper (358 HK).
 Hayden Atkins says China‟s rising auto use is bullish for PGMs, with Impala
(IMP SJ) and Anglo Platinum (AMS SJ) the top picks.
 Michael Sohn remains positive on Hyundai Motor (005380 KS), rating it as
his top Korean auto pick and a Macquarie MarQuee Buy Idea