“China is a time bomb,” said Jean-Jacques Durand, an emerging market debt manager at Edmond de Rothschild. “Their political system (of state control) is in complete contradiction with the way they want to go [economically]. Maybe they will hold out for the next few years, no-one knows,” he said. “The only certainty is that China will implode eventually.”
The unprecedented capital outflows China witnessed over 2015 can be perceived as a symptom of the lack of trust in the country. However, this can also be interpreted as a sign of health, since many of these outflows have actually been used to buy stakes in large Western companies, according to Julie Dickson of Capital Group. “Foreign buying by Chinese companies has been really good. This gives us a bit more reason to sleep better at night,” she said in response to Durand’s doomsaying. “We also continue to see pockets of growth in consumer spending and in robotics, which are attractively priced.”
Don’t bet on Brexit
The other big macro risk that drives markets these days is of course the issue of Brexit. Ben Lofthouse, a global equity manager at Henderson, forecasted elevated volatility in the run-up to the Brexit vote. “Nobody has left the EU before, apart from Greenland, so a Brexit vote would provide a lot of uncertainty,” he said.
But at the same time he had reassuring news for people fretting about such a scenario. Brexit will not happen. “We British bet on everything, and the betting market suggest very firmly we stay,” he said. And here is why: “When you see the polls, they show 40-40 with 20% undecided. Key is what this 20% does, and in this sort of situation, generally those people tend to decide on the side of caution, which means voting for the status quo,” said Lofthouse.
|
|
Though the prospect of China imploding is hardly reassuring for an emerging market debt manager like Durand, the Frenchman also managed to end on a positive note.
“We could see a surprise on the geopolitical side, simply because it cannot really getting much worse than it is now. Something might happen to Putin for example. That might make things a bit better,” he quipped.
Click here to see a full overview of delegate voting results.
Here you can see a slideshow of photos taken at the event.
