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China Ahead Of The Curve
Change in growth rate is the fear
Event
China has inflation under control but growth indicators will likely print a
mixed picture over next month or so.
Impact
There has been some slowing in China inflation, especially in the allimportant
food category. Credit growth has also slowed. Our Head of China
Economics, Paul Cavey, believes inflation will slow in coming months, but
so too will growth.
With China being the locomotive of growth for the world over the past year,
investors will naturally question the outlook in the short term. However, the
outlook is for stronger world growth in the medium term.
Investors also remain concerned as to the rate of growth of the US in the
short term after a slow start to the year. This combination will result in mixed
returns for markets in next few months.
Risk levels are climbing as evidenced by the VIX index and weaker
performances of high-growth beta investments. The VIX historically posts a
low in April and rises into July. This was indeed the case this year, with the
VIX up around 18% since the low seen in late April.
With the economic growth outlook clouded, markets will likely mark time
between now and August. This is typically a seasonally mixed period for
returns.
Outlook
We recommend investors increase holdings in emerging markets and in
Europe in this period. Markets offering value include the UK, Germany
Korea and Russia. Those appearing to be poorly priced include Japan,
India, Hong Kong, Switzerland, Canada and Australia. Our Asia Strategist
Michael Kurtz is recommending Korea, Taiwan as overweight and Hong
Kong as an underweight.
With risk likely to be higher in this period – emerging markets will offer an
attractive entry point compared to developed markets. Developed markets
will perform more strongly in the next few months.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
China Ahead Of The Curve
Change in growth rate is the fear
Event
China has inflation under control but growth indicators will likely print a
mixed picture over next month or so.
Impact
There has been some slowing in China inflation, especially in the allimportant
food category. Credit growth has also slowed. Our Head of China
Economics, Paul Cavey, believes inflation will slow in coming months, but
so too will growth.
With China being the locomotive of growth for the world over the past year,
investors will naturally question the outlook in the short term. However, the
outlook is for stronger world growth in the medium term.
Investors also remain concerned as to the rate of growth of the US in the
short term after a slow start to the year. This combination will result in mixed
returns for markets in next few months.
Risk levels are climbing as evidenced by the VIX index and weaker
performances of high-growth beta investments. The VIX historically posts a
low in April and rises into July. This was indeed the case this year, with the
VIX up around 18% since the low seen in late April.
With the economic growth outlook clouded, markets will likely mark time
between now and August. This is typically a seasonally mixed period for
returns.
Outlook
We recommend investors increase holdings in emerging markets and in
Europe in this period. Markets offering value include the UK, Germany
Korea and Russia. Those appearing to be poorly priced include Japan,
India, Hong Kong, Switzerland, Canada and Australia. Our Asia Strategist
Michael Kurtz is recommending Korea, Taiwan as overweight and Hong
Kong as an underweight.
With risk likely to be higher in this period – emerging markets will offer an
attractive entry point compared to developed markets. Developed markets
will perform more strongly in the next few months.
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