While US spending balloons, China has begun to tighten the fiscal taps, says The Economist. Prime Minister Li Keqiang has announced a lower fiscal deficit target for this year. Meanwhile, the central bank has begun to withdraw liquidity in a bid to cool speculation. Guo Shuqing, the country’s chief banking regulator, recently warned of bubbles in domestic property and global financial markets. Chinese investors have been put “on notice”.
The newly published five-year plan has not done away with the traditional growth targets, but they do appear to be “vaguer and more flexible than before”, says Andrew Batson of Gavekal Research. Instead, there is a pivot towards a “pledge to keep China’s debt-to-GDP ratio stable or declining”.
The renewed emphasis on debt levels has given investors pause for thought, say Joanne Chiu and Xie Yu for The Wall Street Journal. The CSI 300 stockmarket benchmark soared by 27% in 2020. Yet the index has slid by 10% from its latest peak. Still, this “slow bull market” may not be over yet, says Wendy Liu of UBS Global Research. Investors may just be catching their breath.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
A key bullish factor is that Chinese mergers and acquisitions (M&A) activity has had its “busiest start to a year on record”, say Tabby Kinder and Thomas Hale in the Financial Times.
The total value of domestic dealmaking amounts to $77.5bn so far in 2021. Mainland Chinese businesses used to go on acquisition sprees abroad; but now Beijing wants to develop more domestic, consumer-led industries, while geopolitics has made overseas acquisitions more difficult in recent years, says David Brown of PwC. “That has redirected a lot of capital that would previously have gone outside the country back into domestic acquisitions”.
-
Investors continue to pull money from equity funds but at a slower rate – where is the money going?Concerns about tax rises in the Autumn Budget continue to drive investor behaviour. Here is how fund sectors were affected in September
-
Halifax: UK house price growth hits new high for 2025 despite Autumn Budget tax fearsAverage UK house prices continue to rise but challenges remain, particularly in prime markets
-
'Why I launched MoneyWeek'Inspired by The Week and uninspired by the financial press, Jolyon Connell decided it was time for a new venture. That's where MoneyWeek came in
-
'My predictions for the next 25 years'Opinion What will the world look like when MoneyWeek celebrates its 50th birthday? Matthew Lynn shares his predictions
-
How have central banks evolved in the last century – and are they still fit for purpose?The rise to power and dominance of the central banks has been a key theme in MoneyWeek in its 25 years. Has their rule been benign?
-
What MoneyWeek has learnt in the last 25 yearsFinancial markets have suffered two huge bear markets and a pandemic since MoneyWeek launched. Alex Rankine reviews key trends and lessons from a turbulent time
-
The Stella Show is still on the road – can Stella Li keep it that way?Stella Li is the globe-trotting ambassador for Chinese electric-car company BYD, which has grown into a world leader. Can she keep the motor running?
-
Global investors have overlooked these solid stocks going for growthOpinion Nisha Thakrar, investment specialist at Nedgroup Investments, selects three undervalued stocks with long-term growth potential
-
LVMH is set to prosper as the wealthy start shopping againAfter two years of uncertainty, the outlook for LVMH is starting to improve. Is now a good time to add the luxury-goods purveyor to your portfolio?
-
Japan is still rising to new highs – here's how to investOpinion Political ructions in Japan are no obstacle to gains, and the return of inflation may even benefit stocks, says Max King. What is Japan doing right?
