Will China’s Economic Transition Benefit the Country?
Small and medium enterprises (SMEs) remain at the center of the narrative as China transitions from an “old” production-driven model to the “new” consumer and service-led economy.
Since the global financial crisis in 2008, China’s debt concern has increased. China (FXI) (CNXT) landed itself in massive debt to revive its economy.
We continue to believe that when evaluating any investment in either the emerging markets or any global allocation of assets, China needs to be considered.
While China may not be posting the double-digit growth numbers of a decade ago, we believe the country continues to offer interesting investment opportunities.
Digital India aims to make government services available to all Indian citizens electronically by providing countrywide Internet connectivity and infrastructure.
Demographics are important indicators that will drive growth in Brazil’s economy. The country has a younger population than developed nations and regions such as the US, Japan, and the Eurozone.
There’s no doubt about the fact that the Chinese economy (FXI) is indeed slowing down. However, this slowdown may not be as alarming as it’s made out to be.
But is the panic over China’s stock market turmoil, its currency devaluation, and its economic health really justified? Let’s look at three key areas of concern.
China’s inflation rate jumped to 2.3% year-over-year in February. It stood at 1.8% in January.
China’s mid-2015 stock market crash shattered investor and consumer confidence. China-originated risk has been affecting the global (ACWI)(VEU) market for some time now.
For China to successfully translate increased spending into economic growth, the economy may need to accelerate.
Consumer credit will be a critical indicator to watch, given China’s mission for consumption-driven growth.
Higher wages mean increased household income, and increased household income leads to increased consumer spending, which would fuel China’s growth.
China is currently fraught with a range of issues. Moreover, betting against the Chinese yuan is a risky affair.
There are those betting against the Chinese yuan on the belief that it will keep trending south. There are also those betting against the Chinese economy.
The expectation of a fall in the Chinese yuan’s value remains almost unanimous among the various market participants.
At the turn of 2016, we heard Kyle Bass of Hayman Capital recommend shorting the Chinese yuan as a great investment opportunity.
China’s number one position as the country with the largest foreign exchange reserves is losing ground.
If China devalues its currency again, metals could fall to new multiyear lows. China’s foreign currency reserve fell by $99.5 billion in January.
Three of China’s leading brokerages—CITIC Securities, Haitong Securities, and Guosen Securities—were probed by regulatory authorities for suspected flouting and violations.