The attached edition of Oliver’s Insights looks at prospects for the Chinese economy.
The key points are as follows:
- After surprising on the downside into mid year, recent Chinese economic indicators suggest growth is bottoming and is likely to come in around 7.5% this year.
- However, a sharp growth rebound is unlikely as policy has not been eased enough and export growth will be constrained by recession in Europe and slow growth in the US. Expect growth in 2013 to also be around 7.5%.
- Radical changes in policy direction are unlikely under the new leadership. Change will likely remain gradual.
- Chinese shares are very cheap and have probably bottomed.
- A stabilisation in Chinese growth around 7.5% is likely to be positive for the Australian economy and resource stocks.
To read this edition of Oliver’s Insights, click here.