China: three reasons for some cheer

In the midst of the negativity and sell-off in Asian markets, I am starting to turn a bit more optimistic. By no stretch of imagination am I suggesting that we do not have issues to deal with. The risks from China are obvious and repercussions across the region could be severe. The debt overhang across many countries impedes growth (we have, in effect, borrowed from the future to consume) as well as affecting valuation. Increased debt in a disinflationary, low growth environment is a big problem. Some even suggest that with central banks at the end of their tether, we might be facing a serious crisis. All of this is certainly a very real possibility. But I do think that some requisite conditions for turning positive on Asia are starting to fall into place. (VIEW LINK)