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Will China be the next big headache?

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Will China be the next big headache?

Hi James,

With the focus on inflation and omicron causing market jitters, no-one seems to be talking much about China's re-structure plans resulting in a dramatic slowdown in growth. Is China playing with fire here and could this lead to a global recession aka 2008, or do you think they can engineer a controlled re-structure while maintaining reasonable growth?

Many thanks

Alex

Answer

Hi Alex,

A huge and fascinating question, it makes me think of a gymnast walking along the beam with the slightest wobble likely to scare many in the audience. We witnessed a major bearish reaction by equities in 2015/6 when it thought China was going to derail the global economy and I wouldn’t be surprised to see history repeat itself at sometime in 2022/3 but we feel that’s good reason to be cautious stocks as opposed to selling a portfolio and moving to cash. From a portfolio perspective, this is where asset allocation becomes important.

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The VIX (volatility) Index
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