The winners and losers from China’s changing economy
Emerging market debt had a torrid time in May/June, certainly reflecting continued unwinding of leveraged bond trades generally, but also hit by sovereign credit stories on Turkey, worries about Indonesia and India and a slowdown in China- a key source of demand for many emerging market countries and companies. To be clear, I don’t believe that the slowdown in China is a problem for global growth, but it is going to create some clear winners and losers, as the shape of the economy changes, particularly in emerging markets that had previously relied on exporting raw materials. Production, notably heavy, energy intensive production, is slowing rapidly, but consumption is rising fast. The Chinese authorities are actively targeting lower energy intensity in economic growth, which suggests that the old energy and resource focussed exporters to China will continue to struggle, regardless of top line GDP growth. Read my weekly note here: (VIEW LINK)
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