The growing dominance of China
A survey by Asian Investor gives some insight into how global investors are looking at Asia over the next 12 months. An overwhelming 41% of respondents listed China (including Hong Kong) as their first choice based on location, with first, second and third choice votes for China adding up to 65% as opposed to 50% in the same survey last year. I continue to see China as an opportunity set, providing the spectrum of potential return vehicles for long term investors searching for yield. In this sense, China can provide a disinflationary pulse for asset prices in the same way as it did for goods prices. To elaborate on this a little; if we track the baby boomers over time, wherever they go, they take an inflationary pulse with them. In many ways this should not be surprising since they tend to produce a demand shock relative to supply, which then tends to produce a supply response, but with a lag. Once they move on then we have the opposite, disinflation as the new supply exceeds demand. Read more: (VIEW LINK)
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