Monetary easing is expected to continue in China over the next year.
But, it may not be enough to boost China’s slowing economy, says Raymond Chan, chief investment officer of Hamon Investment Group. The company manages the Renaissance Asian Fund and Renaissance China Plus Fund.
Industrial production was weak the last few months, until August. Meanwhile, export growth in July was only 1%, as a result of the ongoing problems in Europe and other parts of the world.
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Further, China’s next political meeting is slated to occur in October, where the Communist party will discuss the next generation of leadership.
“There’s a bit of uncertainty among how political leadership will form,” he says. “Also, the fiscal policy has been low both on the local and central government levels.”
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The silver lining? The country’s property market is improving, as lower interest rates and additional funding for first-time buyers is making it easier for them to enter the market.
Builder sales were also up earlier this year.
“The market is concerned whether monetary easing, [and] property market improvement will be translated into better or stabilized economic growth in the second half of the year and first half of 2013,” says Chan.