Don’t Short China – July 12, 2021



Concerns that China will create problems for the global economy have become chronic in the past decade or so. The recent moderation in Chinese economic growth, after a relatively more muted pandemic slump/recovery, is starting to generate some angst. Moreover, the ongoing regulatory attack on select high-flying mega-cap tech shares in China is adding to concerns.
A just-published report examined the outlook for the Chinese economy, policy and asset markets, and concluded:

  • The economic emergency is over, and economic policies are returning to normal.
  • China’s domestic demand will continue to provide solid support for the global economic expansion, driven primarily by consumption.
  • Renewed worries over antitrust measures aimed at internet stocks are temporary in nature, and do not threaten the cyclical advance of either stock prices or domestic demand.
  • Stay overweight China within an EM equity portfolio. Stay neutral on the currency and yuan-bonds within their respective EM portfolios.

 







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