Baxter Asset Management in Switzerland commented Wednesday that it believed China's economic slowdown would be handled effectively, such as bond defaults that could rise at a slow rate so that the authorities could ensure adequate liquidity in the market.
Huang Siyuan, senior investment manager at Baxter International's diversified asset division, said the market was adjusting earnings for Chinese companies at the same time. Economic growth slowed in the third quarter and may further decelerate. Car sales, commodity consumption and corporate earnings of technology stocks are all showing signs of slowing, and earnings forecasts need to be downgraded accordingly.
"Investors are still not aware of China's policy and direction of reform." "Markets need to compromise or adjust for these uncertainties before they can stabilize," he said.
Nevertheless, China's economic slowdown will be dealt with effectively. For example, bond defaults may rise at a slow rate, so that the authorities can ensure that the market has sufficient liquidity. In addition, Beijing plans to introduce tax cuts to stimulate consumption.
Huang believes that global stock market declines are caused by several factors, including interest rate spreads, over-optimistic corporate earnings forecasts, geo-green politics and China.
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