Brian Tora from JM Finn & Co gives his insightful market commentary for UNIQ Family Wealth:China’s growth prospects
With China’s President on a state visit to the UK, what better time could there be to look at the most populous nation on earth. Given that our leading steel maker has just laid off over a thousand workers, blaming cheap Chinese imports, the signs are not that propitious. Certainly, if we needed any confirmation that China’s era of rapid economic expansion was coming to an end, the latest release of data from the world’s second largest economy provided it. Chinese real Gross Domestic Product grew by just 6.9% on an annualised basis in the third quarter of the current year.
OK, it’s still a higher rate than we can hope to achieve here in the UK – or in the rest of the developed world, for that matter – but the trend is clearly downward. Moreover, there is a degree of scepticism that the rate of growth is really as high as is claimed. The statistics that come out of the Peoples’ Republic could well be telling you what the authorities there want you to believe, rather than painting a wholly accurate picture.Industry Outlook
But back to the figures that were shared with the rest of the world. It seems that the industrial sector there is slowing dramatically and could even be in recession. Fortunately, a more robust service sector and a growth in consumer spending helped offset the effect this contraction might have delivered. Still, at less than 7%, this is the slowest reported pace of growth since the beginning of 2009 when we were all suffering from the financial crisis of the previous year which ushered in a global recession.
While China is not the only area causing concern at present, it does have implications for the price of many commodities, which in turn is hitting those countries heavily dependent on exporting raw materials, like Brazil and Russia – not to mention our own steel industry. Oil continues to languish at around $50 a barrel – good news for consumers, but tough for those economies reliant on exporting the stuff. And with metals like copper still under pressure, emerging markets remain out of favour.
However, all this economic uncertainty looks like leading to further delays in the US Federal Reserve Bank putting up interest rates, which is why markets have been in a steadier frame of mind recently. Our own FTSE 100 Share Index started the week in a subdued fashion, but has made up ground during recent weeks. With little in the way of major corporate or economic news expected as we approach the end of the month, let us hope we can retain the more positive tone for shares.
Brian Tora, who is a respected writer and broadcast-er on investment issues, is a consultant to JM Finn & Co. Brian has enjoyed a long and distinguished career in the City. Any opinions expressed are his own and should not be construed as advice from JM Finn & Co. A version of this article may appear elsewhere in the press