Connect with us

Business

China’s big leverage crackdown gets a big shrug from markets

Published

on

The Chinese leadership has this year made its strongest commitment yet to curb financial risks and rein in spendthrift local officials, yet the campaign has spurred barely a ripple of concern among global investors.

In a recent survey, China hardly registered on the list of dangers eyed by fund managers and strategists that could threaten the “Goldilocks” boom in stocks and credit around the world. That’s a big change from two years ago, when a surprise devaluation of the yuan spooked markets, all the more because it came just weeks after China’s equity bubble had started to burst.

Setting aside the permanent bears on China, what’s also missing nowadays is fears of a hard landing for the US$11 trillion economy. Key to the change has been President Xi Jinping’s need for smooth sailing in the run-up to a critical once-in-five-years Communist Party leadership reshuffle in coming months. Policy makers have delivered the goods, with growth near 7 per cent — stoking corporate earnings even amid the clampdown on leverage.

“If you look back at the last six, seven years, investors were always concerned about China,” said June Chua, a Hong Kong-based fund manager and head of Asian equities with Harvest Global Investments Ltd. “We’ve always had earnings that were on a constant downgrade. This time, this year, we’ve actually seen an upgrade cycle happening in China.”

Chua said she recently increased the weighting of Chinese shares in the international portfolios she helps manage. Harvest, with US$114 billion in assets under management, is one of the largest Chinese asset managers, though capital controls mean its overseas holdings are mainly for non-mainland China resident clients.

Those same capital controls keeping Chinese money at home also play a part in diminished worries about China, because they’ve helped to stabilise the yuan and calm fears of a continuous depreciation. Partly thanks to the dollar’s broad decline in recent months, the yuan has risen 3.6 per cent this year, after falling for three straight years through 2016.

“The pressure is off,” said Jing Ulrich, vice…

Source link

Continue Reading
Click to comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Top Posts

Recents

China4 weeks ago

How will Thailand’s election affect China?

China's investment in Thailand will not be affected much by the result of the general election.

United States2 months ago

Huawei Sues the U.S. for Restricting Business With Federal Agencies

China2 months ago

Chinese investors spent $2.3 bln in Thai property in 2018

Chinese investors have continued pouring their money into Thailand’s property sector even as the kingdom barrels toward an uncertain national election. See author's...

China5 months ago

US–China trade war : will there be a winner ?

The U.S. and China are hours away from a new round of tariffs on each other’s goods, with no improvement...

Economics5 months ago

Trumping financial risks in Asia

Twenty years after the Asian financial crisis of 1997–98 and the global financial crisis of 2007–08, storm clouds are gathering...

Companies5 months ago

Thai Startup Event Banana

Event banana, a Thai start-up based on event venues and its online marketplace, has recently been able to raise about...

Business6 months ago

营商环境报告:东亚经济体继续大力推进改革议程改善营商环境

世界银行集团今天发布的《2019年营商环境报告:强化培训,促进改革》称,东亚太平洋地区各经济体继续大力推进改革议程,在过去一年里实施了43项改革以改善中小企业的营商便利度。 bsullivan See author's posts Related

News7 months ago

What are US-China Trade War Implications for Thailand ?

What are the implications of a US-China for Thailand? Will the economy be hit by global market disruption? Or could...