Ghosts of China’s 2015 will continue to cast a shadow over global markets

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Nancy Curtin (pictured), CIO, Close Brothers Asset Management, comments on China’s latest GDP figures…

The ghosts of China’s 2015 will continue to cast a shadow over global markets this year, and this is unfortunately the unhealthy start we were expecting. Weak manufacturing and construction figures have dented confidence, and despite attempts to stabilise it, the Chinese equity market continues to tumble, leading investors to question the efficacy of Chinese policymakers. The latest retail figures are also not helping those concerned that the services sector is not yet growing at sufficient pace to shoulder more of the country’s economic burden.
 
That said, the shift over to the consumer-led economy was never going to be a smooth ride, or happen overnight. Yes, the balancing act will become ever more important as we move forward, and we can expect ongoing volatility while the tightrope is walked. However, there are clear signs that consumer confidence is resilient enough. Without exception, service PMIs have been in firm expansion territory since mid-2013 in the US, China, Europe and the UK. China’s growing middle class is not to be underestimated, not the spending power they bring, and investors should recognise that this is a long-term game.

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