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Market reacts to China’s slouch, commodities take a hit
Concerns that China’s economy may have peaked, potentially sparking a global knock-on effect, is premature at this stage, says an investment director, despite commodities taking a hit.
Market reacts to China’s slouch, commodities take a hit
Concerns that China’s economy may have peaked, potentially sparking a global knock-on effect, is premature at this stage, says an investment director, despite commodities taking a hit.
Investors have been concerned that Beijing’s efforts to rein in a credit bubble will start to wear away at growth, precipitating corporate defaults and squeezing investment demand.
However, Acorns Grow Australia chief executive George Lucas believes otherwise, saying 2017 will be a politically important year for China, with President Xi Jinping set to preside over a change to the Communist Party’s key personnel at the five-year National People’s Congress.
“Investors need to remember that there is a lot of incorrect reporting of China’s peak and that it may continue to reach new heights, just at a lower rate of growth,” Mr Lucas said.
“If there are signs of fragility in the economy after June, we would expect the government to relax credit policies to kickstart the economy.”
Concerns about China have also seen oil prices face a recent decline, with the key commodity falling by 7 per cent last week, as China has been a key source of demand.
Oil is being hit further by a lack of market confidence in OPEC’s ability to overpower the resurgent US shale industry.
Oil had its biggest weekly drop in a month, while WTI and Brent benchmarks fell by more than 7 per cent, their biggest falls since early March.
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