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Share Name Share Symbol Market Type Share ISIN Share Description
JP Morgan Chinese I.T. LSE:JMC London Ordinary Share GB0003435012 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 234.00p 232.00p 236.00p - - - 25,922 16:28:42
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 0.0 3.5 4.3 54.2 175.51

JP Morgan Chinese I.T.Plc Share Discussion Threads

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Dale Nicholls, Manager of Fidelity China Special Situations: "From my ten years of investing in China, I struggle to think of a better time to find opportunities. Yes, there are some clouds on the horizon, but these are part of the reason I’m so excited. "For years, the benefits of China have been easy to see, but now they’re a bit less obvious. While many investors are focusing on the short-term economic outlook, I’m looking at the country’s far-reaching reforms that aim to turn its economy away from exports and towards its own consumers. This could create a great environment for companies to grow, and while other investors are nervous, I am seeking to boost performance by searching for opportunities at a good price that they are missing out on." One of the world’s most exciting markets: China has a population of over 1.3 billion and a rapidly growing middle class. Its economy is already the 2nd largest in the world by nominal GDP and it’s in the middle of a vast programme of reforms that aim to make it a freer market where companies can flourish even more. Dale focuses on three types of companies – those with good long-term prospects, cash-generative businesses and those with strong management teams. In many cases, these factors are not well understood by the market, so they are not reflected in valuations. He also focuses on smaller companies, as these are often less well researched and, therefore, are more likely to be mispriced. However, smaller companies also tend to be higher risk, so meeting the management is essential for Dale to understand their prospects and monitor their progress. Dale stresses that investors must take a long-term view with this trust, as patience is sometimes required for these factors to be recognised. "The Directors believe that China is too large a market for investors to ignore, so we launched this trust to give people a way of participating in the growth of the Chinese economy. "Of course, stock markets don't tend to follow economic growth exactly, so we think it is important to see the trust as a long term investment. "The Directors have instructed the manager to invest in companies and sectors that supply the needs of China's rapidly growing middle class, as we believe the country's rising prosperity has a strong and lasting momentum. What’s your outlook for the coming months? Although the economic situation is a little subdued, I think the market sometimes gets so caught up in headline numbers – such as economic growth and property prices – it can miss the long-term opportunity. For me, this is the government’s current reform programme and its shift to a consumer-driven economic model. It’s true that growth is likely to be slower, but it will still compare very well to many other major economies. I also believe there will continue to be a good environment for companies to grow, particularly businesses in the areas of the economy that the government is focusing on, such as consumption. As valuations are currently attractive, I think this looks like a good time to be investing in China. Why is the reform programme so significant? It’s hard to overstate the importance of the country’s reform programme – it is one of the biggest stories for China in 2015. The aim of the reforms is to provide a solid foundation for China’s next phase of development. One key change is the announcement of the Hong Kong-Shanghai Stock Connect programme. This will allow international investors to access the domestic Chinese stock market without the need for Government permission and give Chinese investors the opportunity to access international equity markets. There is also the introduction of market-orientated pricing mechanisms across a range of sectors, plus reforms focusing on the efficiency and profitability of State Owned Enterprises, including the introduction of corporate practices we take for granted in the West, such as management incentive schemes. In addition, the government is taking steps to release pent-up consumer demand through changes in social welfare, such as the hukou system. This will effectively give 100 million migrant workers the same social and health care benefits as the residents of the cities they work in.
Emerging markets: Slow growth, long-term vitality by James Saunders Watson: The slowing of China’s economic growth pace, from a sprint to something more akin to competitive marathon running, has raised questions not only about its own prospects but those for the group of bigger emerging markets of which it is seen as the leader. But, we believe, there is plenty of evidence that this alleged reversal of fortune has been exaggerated and that the outlook for China, and for “emerging Asia” in general, remains positive. China’s pivotal role in the global economy Chinese New Year on February 19, 2015 saw the Horse give way to the Goat. Characteristics of those born in the Year of the Horse, according to the traditional eastern zodiac, include a tendency to be easily distracted, while those of people born in the Year of the Goat include kindness and a love of peace. For those hoping for better news this year from the world’s second-largest economy, the Chinese horoscope proves, at best, a somewhat-opaque guide. Perhaps the International Monetary Fund (IMF) can do better. In April, the fund held its Spring meeting in Washington, a chance to take a health check on the world economy and peer into the near future. At a time when China’s slowing growth is seen as symbolic of a general fall from favour of the emerging-market economies, what the Fund’s top people had to say was encouraging for those who feel the doom and gloom has been overdone, both in terms of China and of many of the other emerging giants, of which it is seen as the leader. The view from the IMF: Thus the April 2015 edition of the fund’s World Economic Outlook [WEO] forecast a slowdown in Chinese growth from 7.4 per cent in 2014 to 6.8 per cent this year and 6.3 per cent next year.2 But, this seemingly bad news may be nothing of the sort. At a press conference in Washington on April 14, Gian Maria Milesi-Farretti, of the fund’s research department, said: “We think it is a good slowdown for China. It is associated with a more balanced pattern of growth and with a reduction in vulnerabilities.R21; He added: “Our basic assumption is that policies will do less to push growth at all costs, and this is going to have some short-run negative effect on the level of growth but positive medium-run effects because you have slower growth of credit, slower build-up in imbalances, and ultimately you are heading towards a place where you have a more balanced structure of the macro economy.” "Developed countries ought to be delighted. For years, the west has complained about China’s “export model”, which allegedly has allowed it to build up huge trade surpluses across an under-valued exchange rate." China’s leadership has suggested it is amenable to shifting the focus to domestic demand, but the West has been sceptical. Beijing’s balancing act: On May 27 2011, in a regular report to Congress5 on the international economic scene, the US Treasury suggested China may not be serious about reforms: “China is not allowing the exchange rate to serve as a tool to counter inflation in its own economy. The policy complicates the adjustment needed for broader financial sector reform. It works against China’s stated goal of strengthening domestic demand.” As Mr Milesi-Ferretti pointed out 3, China is very definitely rebalancing the economy towards domestic consumption and away from breakneck export-led growth and the rest of the world seems nervous. A case, perhaps, of being careful what you wish for. On April 18, 2015, Christine Lagarde, managing director of the IMF, underlined the institution’s positive view of China: “There is strong confidence in growth continuing in China, certainly not at the level that China has had in the last decade but growth which is of a different nature, more quality growth with a migration from investment to consumption, which seems to be quite deliberate and supported by the authorities.” The wider emerging markets picture: Regarding emerging markets more generally the picture was mixed. At the April 14, 2015 press conference, Olivier Blanchard, the IMF’s chief economist, said: “If you turn to emerging markets, the decrease in potential growth is even more visible and it comes from, again, aging in a number of countries, in many countries, and a decrease in productivity. What we do not see is the decrease pre-crisis, but since the crisis, and probably coincidentally, rather than due to the crisis, we see a decrease in potential growth.” But within this overall view there were, aside from China, some strong performers. Take India, about which the WEO said: “Growth is expected to strengthen from 7.2 per cent last year to 7.5 per cent this year and next. Growth will benefit from recent policy reforms, a consequent pick-up in investment, and lower oil prices.” The outlook is less happy in Brazil: “The economy is projected to contract by one per cent this year—more than two percentage points below the October 2014 (WEO) forecast. Private sector sentiment remains stubbornly weak because of unaddressed competitiveness challenges and the risk of near-term electricity and water rationing,” But there is better news for those emerging-market economies that are oil consumers rather than producers in the plunge in the price of oil, which has nearly halved since the Spring of 2014 from about $110 a barrel to about $60. In 2014, according to the Organisation of Petroleum Exporting Countries (OPEC), out of total world oil demand of 91.15 million barrels a day, India accounted for 3.79 million barrels and China 10.46 million barrels, together making up nearly 16 per cent of the total world oil demand. As the WEO noted; “In…oil importing emerging market and developing economies… lower oil prices will reduce inflation pressure and external vulnerabilities.R21;2 More to come from emerging markets In short, the IMF seems to have concluded that both the “China slowdown” and the loss of faith in the emerging markets have been over-done as, indeed, perhaps was the euphoria over the “BRICS” (Brazil, Russia, India, China and South Africa) of a few years ago. Indeed, at the end of last year the United Nations Conference on Trade and Development (UNCTAD) reported that patterns of trade in goods in relation to developed and developing countries were continuing to converge, as the former group’s deficits and the latter group’s surpluses both fall. In other words, they are becoming more like each other. The WEO sound an upbeat note, reminding the world just how important the emerging markets remain as a powerhouse of global expansion; “Emerging markets and developing economies still account for more than 70 per cent of global growth in 2015.” A story that’s far from over: "China is rebalancing its economy away from an over-reliance on exports towards consumer spending at home, which will have the benign effect of increasing Chinese demand for imports." But although this is precisely the course of action long urged on China by the developed world, the reaction now that it is happening has been less than supportive. The suggestion is that China and those emerging markets of which it is seen to be the leader are now facing a perhaps prolonged period of retrenchment. But falling oil prices and domestic reforms are big plus points for China, India and others. It would seem that the emerging market story is far from over. Since 1993, the changing face of China’s economy has been scrutinised by the investment managers of the JPMorgan Chinese Investment Trust, which was the first such trust to focus on the “Greater China” region of China, Taiwan and Hong Kong. Please remember that investments in emerging market may involve a higher element of risk due to political and economic instability and underdeveloped markets and systems and may be illiquid. Most of the fund invests in companies from a particular market sector. Investing like this can be riskier than investing across many market sectors. This is because the value of the fund can go up and down in value more often and by larger amounts than funds that are spread more widely, especially in the short term.
Reasons to be positive about China: Dale Nicholls, manager of the Fidelity China Special Situations admits some of the negativity towards China is justified but argues that should not blind investors to the huge opportunities in the country. While China is slowing, he says the sheer size of the economy ($10 trillion) means that the 7% growth expected this year represents $700 billion of wealth creation, equivalent to around a quarter of the UK economy. The shift to a consumer-led economy means future growth should be more sustainable, if lower than in the past. ‘This is still a ripe environment in which the strongest companies can grow,’ says Nicholls. China’s debt levels are rising fast and the level of non-performing loans held by banks is expected to soar, which is why Nicholls doesn’t invest in Chinese banks. Nevertheless, they are not as dangerous as that might sound with among the lowest loan-to-deposit ratios in the world, he says. The manager adds that while corporate debts are high, consumer debts are low. Nicholls also dismisses fears of a property bubble. While property prices in many of China’s biggest cities have soared, so have incomes, he says, which means affordability is not as stretched as much as you might think. While there has been over supply of new buildings in some areas, reports of ‘ghost towns’ are overstated, he claims. Looking forward: Nicholls may have reduced his holding in Alibaba, China’s e-commerce giant, to under 2% of the fund, but he is still excited by the growing use of the Internet, which nearly half of the population have yet to adopt: ‘China’s shift to online represents one of the biggest commercial opportunities most investors will see in their lifetimes,’ he says. Similarly, the process of urbanisation and shift to consumption still have a long way to go. ‘Much has been made of the recent anti-corruption crackdown, and this has had an impact at the luxury-end, but I believe that this should have little impact on the underlying drivers behind mass market consumption,’ he writes. Healthcare and infrastructure also remain big themes in the portfolio with Shanghai International Airport one of the biggest holdings in the fund. Nicholls believes the Chinese government will continue to drive reform and open up the economy, creating more investment opportunities. ‘From a stock picking perspective, the opening up of the A-share market is really exciting and I look forward to continuing the search in this market for the many opportunities it offers. ‘At the heart of it all, I still believe stock prices follow earnings and cash flows – and I see strong opportunities for growth in both.’ Nicholls appears to be signalling that the trust could be due another period of turbulence, but it’s notable his long-term confidence in China remains intact.
China Just Upped Its Gold Game - By Jason Simpkins | Friday, June 5th, 2015 It's called the “Silk Road Gold Fund.” Wielding some $16 billion, it figures to be the largest gold fund the world's ever seen. And it's poised to support gold prices, tighten China's grip on the market, and expand the role of the yuan in global trade. If that seems like a lot, it is. It has to be, because China's ultimate plan is to remake the current world order — an order defined by the United States and governed by the dollar. That's no small goal. And it won't be achieved over night. But piece-by-piece, the plan is unfolding. Here's the latest... The New Silk Road: The Silk Road Gold Fund will raise $16 billion (100 billion yuan). Shandong Gold Group will put up 35% of that sum and Shaanxi Gold Group will contribute 25%. The rest will come from private and retail investors. Once the funds are gathered, China will start taking stakes in gold miners and gold mining projects. Specifically, China is targeting gold mines along the ancient Silk Road, traversing the Middle East and Central Asia. This is all part of a much larger “New Silk Road” initiative, China unveiled last year. The goal is to recreate the route with complementary land and sea routes that form a loop connecting Asia, Africa, and Europe. China envisions a vast network of roads, railways, and ports, as well as “capital convergence and currency integration.” The country’s president, Xi Jinping, says the initiative (also known as the ‘One Belt, One Road’ plan) will help double the size of China’s economy over the next decade, bringing $2.5 trillion of additional trade for all those involved. It's already made some headway. China launched the New Silk Road initiative with a $1 billion electrical line in Central Asia and a $10 billion deep-water port in Crimea. The gold fund is just the latest development. Indeed, Central Asia is rich in resources. It has huge deposits of chromium, copper, zinc, and uranium, oil, gas, and of course, gold. Kazakhstan produces around 22 tons of gold each year, a figure comparable to neighboring Kyrgyzstan, which produces 18 tons. And Uzbekistan is the world's seventh-largest producer, mining 102 tons per year. China is both the largest producer and consumer of gold, playing a significant role in determining the overall direction of the gold market. This new fund, and the expansion of the Shanghai Gold Exchange, will further its clout — all to the end of marginalizing the dollar and expanding the role of the yuan. China in Charge: Just by itself, the New Silk Road gives China a tremendous amount of economic leverage. It effectively creates a massive trade network that totally excludes the United States. It also excludes the dollar. That is, traditionally, China and its trading partners have had to convert their local currencies into dollars in order to trade. Every nation does. The dollar is used in about 80% of cross-border trade. That's what gives it its primacy. But that's something China is working to change. It wants to use its currency, the yuan. So for the past few years it's been orchestrating massive currency swaps with its partners. In fact, China has signed currency swap deals worth 3 trillion yuan with 28 countries and regions including the EU. These deals let China trade and invest in foreign assets without U.S. dollars. They also expand the role of the yuan. Then, there's the gold. China has been aggressively stockpiling gold for decades. It's also been rather secretive about its purchases. Some suspect it may one day use the metal to back its currency. Others think it's looking to strengthen its bid to replace the dollar as the world's major reserve — either with yuans or Special Drawing Rights (SDRs). At the very least, it's working to make Shanghai the world's preeminent bullion trading hub. Whatever the intent, it's bullish for gold. By investing in mining projects and loading up on bullion China is supporting gold prices. Gold's been hammered by the recent resurgence of the dollar, but it's just about bottomed at this point. Commerzbank Bank expects gold prices at $1,250 per ounce by the end of the year, up from $1,175 now. But here's the thing... If China succeeds in its ultimate objective, if the dollar's role in global trade shrinks, creating a huge glut of greenbacks, gold will soar to incredible heights. Then, with the world's largest gold reserves, stakes in major mining operations spanning the continent, and trillions of yuan coursing through Asia and Europe, China will be firmly in charge.
Yes it was at a large discount so catching up I suppose.
Up 10.5p this morning, anybody know why? But yippee!!!!!!!!!!!!!!!!!
Why the Chinese bubble won’t burst – at least, not just yet by Matthew Partridge: The Chinese market has had a wild ride this week, experiencing one of its biggest falls this year on Thursday. It’s certainly been a hot market, as my colleague John Stepek noted on Tuesday. “Locals are piling in with borrowed money” and “the government is piling on the stimulus”. As a result, “one key market has doubled in less than a year”. It’s scary stuff. And a market that is fuelled by borrowed money tends to be particularly fragile - “using borrowed money to bet on anything is dangerous” since “if the market falls, then you’ll have to cover any losses”, which can lead to a “cascade”; of selling. Yet that said, “there are some very strong long-term reasons to remain exposed to China”. For a start, “the Chinese government is very keen to open up, deepen and expand its capital markets”. For instance, the new Mainland-Hong Kong Mutual Recognition of Funds programme has just been launched, allowing fund managers to sell Hong Kong-registered funds directly to Chinese investors for the first time. Secondly, “China is also aware that it faces a tricky balancing act in its desire to shift to being a more consumer-centric, modernised economy”. As a result, it “has also launched a range of potential public private partnerships worth more than $300bn to build everything from water-related projects to motorways”. Finally, “while China has already gone ballistic, this could easily continue”. Since the Chinese market is still under-owned by foreign investors, “plenty more people are going to be scrabbling to get hold of them”.
Market indices open the door to China By Graham Smith: Last year’s contrarian investment proposition for some has turned out to be a rewarding choice. China’s mainland stock markets have more than doubled in local currency terms since last summer1. The prospect that China may be about to take a larger share of benchmark emerging market indices could herald a longer term, seismic shift in global markets. It comes down to this. Currently, China accounts for less than 3% of the MSCI All Countries World Index, an important benchmark for fund managers that aim to track or beat global stock markets2. Yet China has the world’s largest or second largest economy (depending on which type of measure you use)3. The discrepancy – and it’s a yawning one – is that index rules, such as how accessible shares are to foreign investors, disqualify a large proportion of China’s stock market from inclusion. Contrast that with America which, by virtue of its policy of making shares freely tradable anywhere, makes up 50% of the MSCI AC World Index2. That means where eastern growth meets western accounting, something ought to give. China started the ball rolling last November, by launching the Hong Kong-Shanghai Connect system. That opened new routes for both foreign and domestic individuals to invest directly in “A” shares listed in Shanghai. Since then, mainland exchanges have surged in value. The response from western index makers has been and remains a guarded one. There’s good reason for this caution too. A sudden increase in China’s representation in global indices could cause a sharp rise in demand from tracker funds far in excess of the daily and aggregate ceilings imposed on shares traded via the Connect programme. The fact that China’s currency is not yet fully convertible remains an issue too. Even so, FTSE Russell unveiled new “transitional” emerging markets indices with 5% weightings in Chinese “A” shares on Monday4. MSCI is expected to announce similar weightings for its existing emerging markets indices when it reveals the results of its 2015 Annual Market Classification Review on 9 June. Meanwhile, the bubble-making ingredients appear to be in place. Much of the recent rise in mainland shares (in both Shanghai and Shenzhen) has been driven by domestic investors buying shares with borrowed money (so-called margin trading). For foreign investors considering taking the plunge, that makes the decision a more complicated one. What would domestic Chinese investors, who have pushed “A” shares higher this past year, do if foreign funds begin to take a bigger share of the market? That’s hard to predict. They could take profits straight away or hang on for more, in the knowledge that foreign allocation shifts take time. Or it may not turn out that way at all. Markets have a habit of surprising most of us and there’s no reason this time should be any different. Unexpected negative political and economic developments could still cause a market exodus, particularly when recent gains have been so pronounced. At least valuations in the broader market look reasonable – despite some bubble-like behaviour, the Shanghai market trades on around 23 times the earnings of the companies it represents6. That’s only a bit higher than world equities generally (19 times) and is down to Shanghai starting out from such a low point in valuation terms last year7. One thing is more certain and that’s the unveiling of the Connect programme last November speaks of the growing openness of China. It suggests the government intends to allow market forces to play a bigger role while imposing less of a hand from the centre, as it signalled it would during China’s Third Plenum in 2013. That being the case, this short term market boom could be a sign of greater things to come.
The Hang Zeng is still way below its all time high while many markets are at all time highs so no reason why the market shouldn't go higher. It seems a good scenario of 6 or 7% GDP growth, lowering interest rates and propery cooling. I don't understand why analysts always compare growth with the past. It's much harder to grow something that's large than when it was small as it were. Analysts don't seem to get that point.
Why China's astonishing rally has further to run: China's stock market is on fire: the Shanghai Composite index is up nearly 40% so far this year, and over 12 months has made an astonishing 142.4%. And the rally shows no signs of slowing. The index is up 6.8% this week while the Shenzhen Composite - which is more focused on technology stocks - is on track to post its weekly gain since 2008, up a whopping 11.4%. You can see just how much China has outpaced other global markets in our exclusive Accumulator data table, which covers the week to yesterday. That has prompted fears among some investors that the country’s stock market has entered bubble territory. But Andy Rothman, China investment strategist at fund group Matthews Asia, is not one of them. As a veteran China expert, having lived and worked in the country for 20 years as a diplomat and economist, Rothman sees the strong rally as evidence the Chinese stock market is playing catch-up after years of stagnation. After crashing with the rest of global stock markets when the financial crisis hit in 2008, shares in China then refused to track the spectacular growth of the country’s economy, as the likes of former Fidelity China Special Situations manager Anthony Bolton will know all too well. Now, with economic growth slowing, the stock market is making up for lost time. Stock market plays catch-up: ‘It’s catch up,’ said Rothman. ‘It seems a bit abrupt that it’s doing all that catch-up in six months – but overall we’re still in the catch-up phase and there’s more to go,’ he said. He added that the rally did not share the excessive borrowing evident in many overheated markets of the past. ‘Has the stock market got ahead of itself? Is it in a bubble? For me, bubbles are about leverage, but there’s not a lot of leverage. I’m hesitant to call it a bubble,’ he said. ‘To me what would be a bubble is people with $100,000 putting $150,000 into the market.’ China’s opening up of its market to foreign investment has helped to spark the rally. Last year it opened the Shanghai-Hong Kong Stock Connect, allowing much more foreign money to flow into the country. Despite this, retail investors still dominate China’s ‘A-share’; market – the name given to Chinese stocks listed domestically, rather than on the Hong Kong stock market. ‘Today, 80% of shareholders in the A-share market is retail,’ said Rothman. ‘Almost everybody wants to have a couple of thousand in the market. People are not in general putting their life savings in – they are gambling a bit.’ China’s population of notoriously prudent savers, accustomed to a poorly-performing stock market, were now rushing to take part, he added. ‘The savings rate is very high. That’s one of the things that makes the consumption story all the more remarkable,’ he said. ‘Where is the liquidity coming from the A-share rally? You had people sitting on a lot of money in the banks, making no interest, but not with much confidence in the market going up.’ More money could flood in: More support from the rally could come from further liberalisation of the stock market. China is expected to allow more foreign investment in the Shenzhen later this year, in the same way it has opened up the Shanghai. Nitesh Shah, research analyst at ETF Securities, which offers the China A-shares ETF, said this move had already been partially priced in to Shenzhen shares. But he argued the ongoing rally on the Shanghai index after the opening of the Connect suggested the Shenzhen market could have further to run once more foreign money actually arrives. And he pointed to a further catalyst that could support Chinese shares. When index provider MSCI last reviewed its emerging markets index in June last year, China A-shares did not make the grade due to the barriers for foreign investors. The results of this year’s annual review are due next month, and even if China’s efforts to open up its markets do not result in inclusion this time, MSCI has left the door open to an interim decision to admit them before 2016’s review. That could lead to a flood of money into China’s market from index trackers and exchange traded funds around the world. If MSCI were to include A-shares weighted according to the market capitalisation, they would make up around 13% of the index, driving around $180 billion (£115 billion) into the market, according to Shah. While that is unlikely due to the market disruption it would cause, even an MSCI decision to include them with a much smaller weighting of say, half a percent of the index, before slowly it building up, it would still lead to $7 billion of fund money entering the market. ‘MSCI remains very, very closed on this topic,’ said Shah. ‘Speaking to a few fund managers, they believe there is a strong chance of inclusion.’ Peter Sartori, head of Asian equity at fund group Nikko Asset Management, also pointed to the impact this could have on the Chinese stock market. ‘China is enacting reforms that could one day necessitate index providers to start including mainland shares on regional benchmarks, thus opening up a huge pool of previously untapped capital,’ he said. ‘Today, China represents 15% of global gross domestic product yet makes up only 1.7% of the MSCI All-Countries Index.’ Property worries: But it’s not all good news for China. Some investors are worried about its slowing economic growth, and in particular its property market, where house prices have started to fall after nearly a decade of growth at an annualised rate of 8.4%. While the days of double-digit economic growth seen before the financial crisis are now long gone, China’s absolute growth in gross domestic product (GDP) will continue to climb, given the much higher base from which it is now starting each year, said Rothman. And while the property market is now undeniably softer, Rothman said he did not see the signs of a crash that have worried other commentators, who point to the disparity between house prices and average wages. ‘Residential developers are not selling to the average person. 20% of people buying a home in China are paying all cash, and there’s a 30% minimum down payment. In the US, in 2006 [the peak of the lending boom], the median down payment was 2%,’ he said. ‘In financial terms it’s completely the opposite of what happened in the US 10 years ago. It’s like the US housing market in the 1950s and 1960s.’ While the property downturn was hurting developers, the pain was not being evenly spread out, he said. While sales were down 8% last year, and likely to fall a similar amount in 2015, the largest developers have reported double-digit sales rises. ‘In a market which is soft, people really want to buy from the big names.’ Chinese companies gather strength: As more foreign money continues to pile into China, some investors will find it impossible to resist joining the flood. Rothman argued that investors who had previously tried to tap into the Chinese consumption boom by investing in Western companies were finding that strategy harder to justify. ‘In the last 10 years a lot of investors played the China story through foreign companies and now it’s increasingly hard to do that,’ he said. ‘Domestic brands in the consumer space are grabbing market share away from foreign companies. When I used to talk 10 years ago to multinational companies they told me their competition was from other multinationals. They are now saying it’s from domestic companies. ‘They are doing a better job in marketing, tailoring their products for the Chinese market. If you are talking about shampoo, ice cream or diapers, these days there are good quality Chinese brands.’
Is China a Fire-Breathing Dragon or a Dragon on Fire? Over the last several weeks, I’ve been telling you about “Disruptors,” the economic catalysts that are serving as agents of change in every geographic market, business sector and asset class you can think of. These Disruptors create winners in some situations, and dislocations in others. And every change brings with it identifiable profit plays. And if there’s one Disruptor story that has dominated the headlines – and the global financial markets – over the past two decades… it’s China. With its low wages and economic emergence, China disrupted the manufacturing markets for technology products, the pricing for rare earths, and shifts in demand for energy, food and capital. The upshot: China, the Disruptor, became China, the wealth creator. If this talk of wealth seems out of place after I’ve spent the last several weeks talking about making money when markets go down, think again… Nothing, you see, goes up forever. Not even China. Sure, China’s economic growth has been astronomical, and the Shanghai Stock Exchange Composite Index has skyrocketed. But the laws of gravity haven’t been repealed. China’s gross-domestic-product (GDP) growth has already cooled off, and stocks took an 8% hit early last week. While this may not be the beginning of the end for the Chinese economic miracle – and its pumped-up stock market – it could be. Then again, a lot of analysts and famous short-selling hedge-fund honchos have been calling for a hard landing in China, which hasn’t happened. Still, that doesn’t mean they’re wrong. It just might mean their timing is off. Here’s what’s scary about what’s going on in China… The “Fast” Slowdown China just posted first-quarter GDP growth of 7%. While that’s super-strong by anybody else’s standard, it’s a marked slowdown for China. For all of 2015, China’s been telling the world its economy will grow at 7%. With three fiscal quarters to go – and 7% the slowest growth since 2009, and the lowest projection for GDP growth in 25 years – there’s a good chance the rest of the year will see more of a slowdown than economists have been predicting. Meanwhile, as the economy’s been slowing, the SSE Composite has been soaring. At its recent high of 4,572, that benchmark index is up an astounding 130% in just a year. Since the beginning of 2015, stocks are up 41%. That’s in the face of a slowing economy. Stocks are being propelled higher by the same “front-running” that occurred in the United States and Europe when speculators flooded into markets ahead of central-bank stimulus moves. Those moves hosed financial assets with catalyzing cheap money, causing a rush higher. China’s central planners and its central bank, the People’s Bank of China (PBOC), have been making rule changes and cutting bank-reserve requirements and lowering interest rates – to spur lending and ease tight conditions in the slowing economy. Desperate times, you see, require desperate measures. While things don’t appear desperate on the surface, the story bubbling under is different – thanks to a mountain of expensive debt that is humbling the borrow-at-any-cost country’s growth model. Consulting firm McKinsey & Co. estimates the cumulative debt of China’s government, corporations and households in mid-2014 hit $28 trillion. According to analysts at Standard Chartered Bank, financial credit surged to 251% of GDP in mid-2014, up from 147% at the end of 2008. Local government spending to meet Beijing’s demanding growth rate targets saddled municipal borrowers with more than $3.64 trillion in debt. As the economy slows, exports taper, construction grinds down and property prices keep falling, the worry is that China will see “rolling defaults.” The PBOC has been doing its part to spur lending by lowering interest rates and reducing reserve requirements. While those central-bank moves are to be expected, they’re not enough, according to central planners. In what looks like a desperate move to flood banks with more money to lend to stressed borrowers, securitization rules have been ripped open. Just recently, the PBOC – with a nod from central planners – announced that regulatory approval of securitization issues of asset-backed securities was no longer required. Now issuers only have to register their deals. Holy financial crisis redux! Ostensibly, the idea here is to let banks – which currently hold $28 trillion in “assets” (assets are loans) – package them into asset-backed securities (ABS), which will mean they’ll be “structured230; Wall Street speak for leveraged, traunched and chock-full of trouble. Those structured securities will be sold to investors – which, I promise you, will include all the same banks selling loans, to get whole loans off bank balance sheets, selling them for cash to spur lending… to already indebted debtors. It’s like déjà vu all over again. Only this time it’s China playing the “derivatives of mass destruction” game. Why will exploding ABS issuance be a problem? How about the lack of regulatory oversight? How about the fact that banks will want to offload bad loans and bury them in structured products? How about the inside-the-ropes, bare-knuckle truth that it was originally a Basel I rule change that lowered the reserve requirements global banks had to maintain against mortgage-backed securities? That led banks to package all their whole-loan mortgages – and hold them as securities rather than whole loans – which allowed them to massively leverage themselves up with riskier securitized loans believing they could sell them in a market rout. We know how well that worked. China is blowing itself into its own bubble. The problem is that it’s eventual bursting is that the contagion will be global and the fallout nuclear. Will this Disruptor hit soon? It’s possible, but not probable. There’s lots of pumping about to start happening. Watching ABS issuance rates will be a good measure of the pace of leverage building in the system. It could take years to blow. Remember Alan Greenspan’s comment in December 1996 that the markets were exhibiting “irrational exuberance”? That bubble inflated another four years before causing the tech-wreck. Remember Citigroup CEO Chuck Prince’s July 2007 comment to the Financial Times: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” It took another 15 months before that bubble almost imploded the global financial system. Timing is always tough when ascertaining a bubble’s expansion. We’re not there yet. So we’ll keep on dancing.
CHINA is currently enjoying the somewhat dubious fruits of one of the all-time great stock manias, writes Sean Corrigan. The CSI300 composite of Shanghai and Shenzhen equities has double since last July, with seven-eighths of those gains coming in the last six months and almost a third of them in the past six weeks. Alongside the rise in prices, volumes are up by a factor of 2.7 from the same time last year while margin debt has exploded to more than Y1.6 trillion ($260 billion) in a classic instance of a credit-collateral tornado of Giffen goods (ones for which demand paradoxically increases, not decreases, as they become more expensive). In fact, it has been reckoned that, at the going financing rate of 8.35%, this means that interest paid to brokers constitutes one of largest, single-sector generators of such income in the entire economy! While all this has been going on, broad P/E ratios have risen from last May's 9.8 single-digit rating to the present 20.5 for the Shanghai A-Share and from an already more lofty 24.3 to today's 49.7 for the Shenzhen equivalent. it is not just Chinese stock markets that are being driven beyond the bounds of sanity by wild-eyed policy measures. Nor will it be just the Chinese who will eventually have to pay the price of such folly but, at the moment, it does appear as if they may be suffering from a more virulent strain of the pandemic that is afflicting the rest of the world too. So, possibly, it will be in their country first that, in Cantillon's words, "this furtive abundance [of fictitious and imaginary money] vanishes at the first gust of discredit and [so] precipitates disorder."
China's "Slow" Growth Is Still Creating Huge Money Opportunities - By Michael Robinson: If all you've been hearing regarding China recently is noise about its economic slowdown, you need to find a better news source. Investors need to stop worrying over China's long-expected gradual slowdown. Do so and you likely will see, as my guest today does, the long-term growth ahead for key tech sectors in the world's most populous nation. I'm talking about the kind of growth that will fill investors' portfolios with soaring profits for years to come. Back from China: That's one takeaway I gleaned from an in-depth conversation I just wrapped up with one of the tech investing world's leading China experts. And he has plenty more evidence to debunk the "Chinese slowdown" story. In other words, Kevin Carter is helping us "Separate the signals from the noise" – Rule No. 2 of Strategic Tech Investor's "Your Tech Wealth Blueprint." He just returned from a trip to China, so now is the perfect time to hear what else he has to say… My guest today, Kevin Carter, runs the Emerging Markets Internet & Ecommerce ETF. On his most recent overseas trip, he spent his time checking up on the health of China's tech industry and economy. Carter's fund concentrates on Chinese tech leaders like STI's "Million Dollar Tech Portfolio" holding Alibaba Group and Baidu, the so-called "Google of China." Today, I want to share his thoughts on the profit potential that lies ahead for Chinese tech firms. The following is an edited transcript of our wide-ranging conversation. Michael Robinson: Having just returned from China, can you give us your ground-level assessment of economic conditions there? Kevin Carter: I'm just back from 10 days in four cities in China – Shanghai, Nanjing, Yangshuo, and Beijing – and I'd have to say, quite strongly, I saw no signs of China "slowing down." Domestic leisure travel, or tourism, is a prime example of consumption and China's move toward a service economy. One of the main things I observed was that all of the places I visited were more crowded than I had ever seen them. And, importantly, the crowds seem to be coming increasingly from second- and third-tier cities. Their increasing presence is an indicator that domestic tourism continues to grow rapidly. Another observation is the spread of the smartphone. As I awaited my delayed flight from Yangshuo to Beijing, I noticed that nearly everyone waiting with me was on a smartphone. From my count, at least 70% of the people were on their smartphones. I also experienced firsthand how app-based business models, like Airbnb and Lyft, are spreading in China just as they are here in the United States. I was the first person waiting for a taxi in the cue at the Grand Hyatt Beijing one night. Three times a cab turned into the circle only to be quickly taken by people that held up their phones and said "Didi Dache." When I expressed my dismay that they were "taking my cab," I was informed that Didi Dache is "the Uber of China." MR: A lot of U.S. investors are worried that China's growth could be slowing dramatically in the next few quarters. Are these fears on target or misplaced? KC: I think people worry too much about a slowdown in China's growth. China's growth rate has declined and is going to continue to decline for a long time. But this isn't news. Nearly all experts agreed that it would slow down, as the 10%-plus growth rate was simply unsustainable. It was one of the only things I can remember everybody getting right. So, the growth has slowed from over 10% to now about 7%. The Chinese government has both called for this to happen and helped to make it happen. I think the current growth target of about 7% is achievable for the foreseeable future. Eventually, it will slow to 6%, then 5% and so on. But here's what everyone's missing. Since the economy is so much bigger today than it was 10 years ago, the absolute amount of growth is greater, because the base is now two or three times larger. MR: And what about China's central bankers, do they seem committed to growth? KC: The Chinese government is clearly committed to growth. However, they have recently taken a somewhat stronger stance that the quality of growth is as or more important than growth itself. The Chinese government has been aggressive in trying to curb the climb in housing prices while not destabilizing the real-estate sector completely. Heretofore, they have been seemingly effective, but this is still in the early stages, and risks are clearly heightened in the real-estate and finance sectors. The government has also been serious in their crackdown on corruption while acknowledging that those efforts may also weigh on near-term growth. MR: How is the "tech industry" doing in China overall, and what are some of the breakout sectors? KC: In short, e-commerce is booming in China. The wave of consumerism in China is going online. Increased access to high-speed Internet connections and falling smartphone prices are leading to a profound shift from traditional consumption, i.e., at the mall, toward e-commerce. In fact, the China Chain Store & Franchise Association just released figures indicating that traditional brick-and-mortar retail had a decline in both employees and locations in 2014. Last month, Beijing's nearly 20-year-old Buynow (Bainaohui) electronics market closed after seeing visitor numbers decline by nearly 80% over the past decade. One analyst recently described the brick-and-mortar retail situation in China as a "recession." Meanwhile, the same report indicated that China's online retail market had grown by 100% in 2014. The smartphone market that is helping to fuel this growth also is showing tremendous growth. MR: We hear a lot about what a huge market China represents for mobile. How big is that market, and what are some of the factors driving it? KC: It surely is a huge opportunity, and it's happening and it's early. You have to remember that most Chinese don't have high-speed broadband coming to their homes via coaxial cable – and never will. They also don't have desktop computers to the extent that we do. What this means is that the smartphone connected to wireless broadband is their first and only access. They are "leapfrogging" the desktop PC model if you will. The factors driving online and mobile behaviors in emerging markets are the same as in the U.S. App-based business models are changing China the way they are changing the U.S., but whereas mobile is a substitute for desktop in the U.S., it's the only way for many in China and other emerging markets. Chinese smartphone maker Xiaomi, which is focused on entry-level devices, reported 60 million units shipped in 2014 – almost all of them sold online. Xiaomi overtook Samsung to claim No. 1 share of China's smartphone market in 2014. Not bad for a company founded less than five years ago. MR: Of course, EMQQ is not just focused on China but on emerging markets in general. Why should U.S. investors have exposure to this area? KC: You're right. The EMQQ index includes companies from India, Brazil, South Africa, and other emerging markets. But China is the largest weight. China is the biggest and most advanced emerging market from the standpoint of both consumerism and e-commerce. However, the same foundational ingredients are in place in most of the developing world. There are over 1 billion consumers coming online in India, Indonesia, Africa, and the rest of the developing world. These markets also lack traditional consumption infrastructure and have fragmented retail distribution. They're getting mobile broadband Internet access and cheap, powerful "pocket-sized supercomputers" for the first time. As these powerful trends continue, so too will the growth of e-commerce in these markets. And the numbers are frankly hard to ignore. The combined total revenue for the 44 companies in the EMQQ index grew by over 39% in 2014 after averaging 41.5% for the previous five years. MR: I'm sure a lot of readers would like to know more about your selection process for EMQQ. Tell us how you pick the stocks that go into the portfolio. KC: EMQQ uses a traditional rules-based index. Any and all publicly traded Internet and e-commerce companies that get the majority of their revenue from emerging markets are eligible for inclusion in the index if they meet certain size and liquidity thresholds. The index is reconstituted and rebalanced semiannually. Today there are 44 companies in the index. The index utilizes a market-capitalization weighting system that is modified to limit the largest position to 8% and ensure diversification. MR: How should investors look at EMQQ? Is this set up for big short-term gains, or is this more of a long-term play where you can average in over time? KC: EMQQ is for long-term investors. Nobody should invest in emerging markets who doesn't have a long-term perspective. By many accounts, the growth of the emerging-markets consumer is going to be quite robust for at least the next 10 years. I think EMQQ provides investors with a way to get exposure to this long-term growth story in a way that captures the generational changes in consumption patterns. Or, more simply, it's the emerging-markets consumer meets the smartphone. MR: Thanks, Kevin. I hope we get a chance to talk again soon.
the market surges again this morning but JMC shows no movement. The Discount is getting even wider. It should be 2.30 not 2.18, strange things going on. Perhaps they should buy their own shares.
China: Where Slower Growth Is Part Of The Plan: The new numbers are out, and the trend remains in place: In the first quarter of 2015, China's economy grew 7 percent-the slowest quarterly pace since 2009. The data comes on the heels of 7.4 percent growth in 2014, a figure that missed the Chinese government's target and was the slowest annual tally since 1990. The most fearful of economic observers still see a possible hard landing in the future. But the optimists see China's economy changing according to plan. For some years now, China has been in deliberate transition to an economic model as reliant on domestic consumption as it is on exports, as well as one that is less driven by public investment. In the process, the country's economic targets have expanded beyond its historical single-minded focus on GDP growth to include things like healthy employment numbers, income growth and social well-being. The 7 percent growth rate isn't even really a surprise; rather, China's current Five-Year Plan, which expires this year, included a target of 7 percent growth in 2015. Indeed, that growth rate is what Premier Li Keqiang was referring to last month when he said the economy had entered a "new phase of slower and better-balanced growth." In 2010, China aimed to keep urban unemployment under 5 percent through 2015, and it has averaged 4.1 percent over the past five years. There's been plenty of job creation in the cities-51 million new urban jobs in the past four years. China has also successfully boosted income in the countryside, reducing the income gap between urban and rural workers. Overall, income has risen by 67 percent in rural areas and 51 percent in urban areas. "This is one of the important objectives of the government in order to promote inclusive and balanced growth," Credit Suisse analysts Amlan Roy, Anais Boussie and Mengyuan Yuan write in a recent report detailing China's progress on its Five Year Plan. In order to bolster income growth and thereby consumption, the government has also sought to provide its citizens with better social welfare. The government plans to increase the retirement age in order to ease the government fiscal pressure imposed by an aging population. The state has also increased subsidies for health services: more than 1.3 billion people are covered by the country's basic medical insurance, a coverage ratio of more than 95 percent. And then there's infrastructure. China's railway network is already over 100,000 kilometers, and it's getting longer: in 2015, more than $128 billion will be invested and more than 8,000 new kilometers of railways will be built. The Chinese government has also started governance reforms. The party is carrying out an unprecedented anti-corruption campaign across all levels of government, while also trying to improve transparency and accountability to the general public. This could help the global perception of China on many non-economic qualitative indicators. This is a profound structural change, of course, and the transition continues to be anything but easy. The Chinese economy could slow even further, especially as China deals with increasing labor costs, oversupply in the housing market and weak demand from Europe. "It's difficult to confront slower growth and make structural adjustments at the same time," Roy, Boussie and Yuan write. "Policy makers have to seek a delicate balance between sometimes conflicting objectives." To this point, however, they appear to be finding that balance.
It's at a good discount at the moment after sudden fall last week. So some catching up to do. Markets above recent highs but this not back to 2.30 reached last week.
hTTp:// "The Chinese market is up by more than 80% since November. Yet as Capital Economics’ Williams puts it: “As long as policymakers are still easing, it is hard to see the rally petering out any time soon”. So we’d hang on to China. There are various ways to invest, but one simple option for British investors is the JP Morgan Chinese investment trust (LSE: JMC)."
The market is only just back to where it was nearly 10 years ago so its got a longway to go to catch up with other markets. Maybe we will get a bubble but surely it would have to treble from here before we get into that territory.
My own policy is to sell, or reduce, holdings with no,or low yields, and hang on to those paying divs., so I can keep paying my bills - taking profits where available, also to use as income. Surely there must be a set-back, either from America raising interest-rates?; the Grexit?; the election? etc.,etc.
Even though playing catch-up, no market goes up in a straight line at some point there'll be a massive correction downwards, while maintaining it's upward trend. The only thing is, when will this correction happen and does one stay invested or try and catch the correction by selling and hoping to buy back in just after the correction???
walter walcarpets
The ‘special relationship’ between Britain and the US took a bit of a knock recently. For once, the slap in the face came from our end rather than from across the Atlantic. Britain agreed to join the Asian Infrastructure Investment Bank – a China-led potential rival to the World Bank. The US had hoped we wouldn’t. And then France, Germany, Italy, South Korea and Australia all decided to join in too. The details of the story aren’t that important. I can’t say that I find the workings of transnational jobs-for-the-boys institutions terribly compelling. But the big picture is clear – whatever your view on China, its economy is becoming increasingly important. And as an investor, that means it offers opportunities you can’t ignore… China’s economic woes haven’t held back its stock market: China has plenty of problems. The property market has been an ongoing problem. Growth has slowed to its lowest rate in 24 years, although it’s still pretty rapid, according to official figures. And China’s demographics are pretty ugly in the longer run. Meanwhile, the key manufacturing sector is barely growing, although the latest data suggests that things might be picking up. But as we often point out, economic growth and stockmarkets bear virtually no correlation with each other in any case. And judging by the action in the Shanghai stock exchange, all of China’s woes are rather irrelevant at the moment. The country’s markets have had a cracking run in the last year or so. And that’s only continued in 2015. That’s partly because speculating on the property market has been swapped for speculating on the stockmarket – the number of trading accounts being opened hit the highest on record last month. (According to Bloomberg, nearly 6% of the accounts were opened by people deemed ‘not literate’, which is hardly reassuring.) It’s also because of that modern-day financial panacea – an accommodative central bank. The People’s Bank of China (PBOC) cut its main interest rates at the end of February. Since then the Shanghai Composite index has soared to its highest level in more than seven years. Why the boom can continue: Can this continue? The truth is, quite possibly. As Chang Liu and Julian Evans-Pritchard of Capital Economics put it, “we think the sharp drop-off in economic activity since the start of the year, along with lower inflation, will encourage greater action from the PBOC over the coming months.” The head of the PBOC – Zhou Xiaochuan – seems to agree, according to Bloomberg. “China’s inflation is declining, so we need to be vigilant to see if the disinflation trend will continue, and if deflation will happen or not… China can have room to act.” In other words, expect interest rate cuts and ‘stimulus̵7;. As a result, the research group reckons the Shanghai Composite will hit 4,000 by the end of the year. A classic cheap-money driven frenzy? Perhaps. But it’s interesting to see that global investors haven’t entirely caught on. As Josh Noble points out in the FT, “the Hang Seng China Enterprises Index – the most accessible gauge of Chinese shares for global funds – has added just 4% this year.” That compares to 17% for Shanghai. As a result, the gap between prices on stocks listed both on the mainland and in Hong Kong has hit a four-year high – in favour of the mainland. Goldman Sachs apparently now expects offshore Chinese shares to rise by another 28% or so from current levels by the year-end. We’ve been recommending China for a while and I’d happily stick with it just now. One way to play the market (both the mainland and Hong Kong) is to buy the JP Morgan Chinese investment trust (LSE: JMC). It currently trades on a discount to net asset value of around 9%.
Some fascinating stuff there, loganair : many thanks for posting it.
China beyond the exports boom By Graham Smith: For China, the year ahead looks set to be one of reform. With the government no longer pulling out all the stops to achieve the highest possible growth rate, there should be a bit more room for an overhaul of state-owned enterprises and the financial system. Will higher quality, but slower growth bring with it better opportunities for investors? That China missed its 7.5% growth target last year, albeit, by just 0.1%, is encouraging in one sense at least – it gives more credence to the government’s official position that it’s targeting the quality of growth over growth itself. That means less credit-fuelled government spending and investment and a stronger consumer economy - something President Xi Jinping describes as China’s “new normal”. The question for investors is whether China’s new growth model - higher quality, but less of it - will nurture better opportunities. China’s stock market might appear to reflect some confidence in that direction. While there has been a marked increase in volatility since November, it has performed strongly since last summer. Part of that may have been down to expectations that a growth slowdown would lead to lower interest rates. The People’s Bank of China cut rates last November and reduced bank reserve ratio requirements earlier this month (the amount of cash banks have to hold to set against the loans they’ve made) to help put a floor under growth. Steps towards improving the operating efficiency of state-owned enterprises (SOEs) have been welcomed too. In the past, SOEs have been at the centre of the debate about the inefficient use of financial capital, an increasingly sore point in a slower growth economy. Not that all of China is slowing. Far from it, in fact: domestic consumption has continued to outpace the economy as a whole, with total retail sales growing by 12% last year4. That reflects deep shifts underway in society, in terms of changes in lifestyle, higher disposable incomes and government-led urbanisation. One of the things in China’s favour, in the realm of technology especially, is “latecomer advantage”. Technologies from the west can be replicated without the need for years of trial and error – they can “leapfrog̶1; the costly, but necessary stages weathered by innovators and early adopters. This could mean, for example, a consumer jumping straight to a smartphone, without ever having had to be tied to a home-based PC. For retailers, that removes an important obstacle to their holy grail – consumers that can shop anytime, anywhere. That seems to be happening in China, with online sales rocketing by almost 50% last year. Unsurprisingly, China’s largest online retailer, Alibaba, which achieved the world’s largest ever share sale in 2014, broke online records on Singles Day last November. That’s not to say consumer-related companies are enjoying universal success. Unilever, for example, reported a 20% fall in Chinese quarterly sales last month, blaming trade destocking of its personal care and homecare products. Then China’s automotive industry association said that car sales fell by 1.1% in January, despite another record month of production. Numerous risks to investing in China in the midst of a broad slowdown remain and that’s reflected in valuations. Even after the stock market’s surge latterly last year, the MSCI China Index trades on a multiple of just 10.5 times the amount earned by Chinese companies over the past 12 months7. That represents a substantial discount to the rating applied to world equities, which have to operate in a much slower growth environment. One risk is that the central bank may find it difficult to cut interest rates much further, even if economic conditions demand it. The prospect of higher rates and a strengthening US dollar threatens a shift of international funds westwards out of China. There’s also the risk that a weak property market could start to have a bigger impact on consumer spending. In the longer run though, and with the benefit of hindsight, today’s valuations could look to have been excessively conservative. If today’s growth slowdown urges the government to push through reforms that, ultimately, galvanise consumption and household incomes, it may yet turn out to have been a critical step in the development of a broader and deeper consumer economy.
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