Hamish Douglass, CEO Magellan Financial Group: China will see a material slowdown and 'most likely a recession

Hamish Douglass, CEO Magellan Financial Group: China will see a material slowdown and 'most likely a recession. Magellan has made a significant shift in its stance on China. Hamish Douglass explains his reasoning for the $21 billion fund he co-founded shifting to being 'quite bearish in the short-term to mid-term on China'. Concerns over unsustainable credit growth are a key reason. The other key is the growing oversupply of residential property. Douglass discusses the country's five years of surplus inventory (comparable to US in 2006), generated by construction that has accelerated well beyond the pace of urbanisation for years. The only way China can address this overhang is to drastically cut the construction rate by 50% to 75%. When this happens depends on regulators, but Douglass estimates it could occur in a 3-5 year time frame. He says 'this will cause a material slowdown, and most likely a recession'. (VIEW LINK)


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