China fears may now be easing

Fears that China could be heading into an economic slowdown, which caused steep stock market falls in the summer, have eased with the latest growth statistics.

Royal London Asset Management head of multi-asset, Trevor Greetham, said: “The latest numbers go some way to easing those concerns, with GDP growth only a fraction of a percentage point below the government’s 7% target as the economy rebalances away from industrial activity and towards consumer spending.” Greetham added that China’s real motivation for de-pegging and devaluing its currency against the US dollar was probably to protect China’s exchange rate from unwelcome appreciation when US interest rates rise. He added: “Ironically, the market turbulence that the Chinese policy shift triggered has itself caused the Federal Reserve to stay its hand and it may lead to further stimulus in Europe and Asia.”

Looking ahead Greetham said that he is positive on stocks, given that China is not imploding. But he added that the global manufacturing sector remains under pressure and he did not rule out further downside risk in the near term.