Consensus still holds that the Chinese economy will grow about 7.5% this year and next, but risks to economic activity are the downside as China’s new leadership seeks to restructure the economy. Investors can expect increased policy-induced (from financial sector reform) volatility in Chinese equities. In addition, prospective strains in the Chinese financial system risk spilling over into the real economy.
Japan as Number One: Lessons for America, scholar Ezra Vogel’s bestselling book that appeared in 1979, may seem anachronistic now, but global investors should not dismiss the possibility that “Abenomics” will lead to a gradual restructuring of the Japanese economy and a transformation as profound as the Reagan and Thatcher revolutions. Such a development could lead to a sustained rally in Japanese equities, but it is too soon to know whether Abenomics will deliver on its promise.
Will the performance of emerging market equities take flight? Or will it be grounded—at least for the short term? Today’s global environment is uncertain, and although valuations are not demanding, emerging markets face headwinds in the short term. The secular drivers of emerging markets remain in place for the longer term. However, in the short […]