60 seconds with Rajeev De Mello on the China conundrum
Well, China has been slowing down and we've seen this decline in the growth rate over the last couple of years. There's a lot of concern right now in markets about how far that will go, and at what rate China will finally stabilise. In the meantime, we've seen quite a few policy actions – China's cut interest rates, has started to boost its fiscal spending and is talking about doing more, and is arresting a bit of the decline in the property prices, which was engineered as property prices had got out of hand a few years back. So, we've seen policy support but we still have a lack of confidence by domestic investors, as well as foreign investors.
Domestic investors are tending to take their money out of the Chinese local currency, the renminbi and put it into dollars, and that's creating a bit of concern around the currency. And, so that is one of the big worries that we face right now. We've had some volatility in the equity market, which has less impact on Chinese growth, but that does translate into some concern about what policy makers can do. All in all, we do think that Chinese growth is stabilising, but it will be a very gradual process and asset classes have to be chosen which will cope with that gradual recovery.
Any security(s) mentioned above is for illustrative purpose only, not a recommendation to invest or divest.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The views and opinions contained herein are those of the author(s), and do not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Opinions stated are matters of judgment, which may change. Information herein is believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy.
Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. Exchange rate changes may cause the value of the overseas investments to rise or fall. For risks associated with investment in securities in emerging and less developed markets, please refer to the relevant offering document.
The information contained in this document is provided for information purpose only and does not constitute any solicitation and offering of investment products. Potential investors should be aware that such investments involve market risk and should be regarded as long-term investments.
Derivatives carry a high degree of risk and should only be considered by sophisticated investors.
This material, including the website, has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.