Despite recent market events, not that much has actually changed in China. It’s more a case of the “chickens coming home to roost” as policy mistakes and major policy contradictions come to a head. Overall we will use further falls in Asian equities as an opportunity to invest in good quality businesses. The situation is not pretty and China is truly in a difficult spot but investors should always remember there is no correlation between GDP growth and stockmarket returns in Asia – least of all in China. Rising bad debts, collapsing Asian equity markets and turmoil in China are, we believe, a buying opportunity as the long awaited economic cycle and creative destruction kick in. We explore this further in “Talking Point: China woes create Asian buying opportunity” (VIEW LINK)
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