We believe the two resource-rich economies – once labeled fragile – will be global growth leaders over the next several years, driven by prudent policies and stable macro fundamentals.
Before Economic Forums were mainstream on Wall Street, our investment professionals were gathering to identify economic and market trends for our clients. Decades later, the cornerstone of our process is stronger and more important than ever.
China’s central government puts high-quality growth as top priority, along with continued support for business and opening-up.
As the COVID-19 recovery continues, we expect Asia’s growth-inflation dynamics to diverge from the rest of the world, led by China’s long-awaited economic reopening.
China’s introduction of comprehensive support for its real estate sector could provide some cyclical relief amidst longer-term headwinds, but new COVID-19 waves cloud the outlook.
Stability, security and self-reliance were overarching themes from China’s twice-a-decade leadership reshuffle. With few details disclosed on near-term supporting policies, we remain cautious on the Chinese market.
Active management appears especially important during this fast-moving cycle when dislocations are likely and capturing resulting opportunities can be key to producing alpha.
China’s regulatory crackdown focuses on specific sectors. Market volatility will likely be temporary, and long-run prospects for active investors remain robust.
We do not expect widespread contagion across China’s real estate or banking sectors despite the challenging outlook.