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The steep decline in China’s stock market is not enough of a reason to put money into the country, according to the chief investment officer of Goldman Sachs Group’s asset management division.
“All of our clients are asking that question. Given how cheap China looks, people will inevitably say, “Why did we ignore the worst news?” Sharmin Mossavar Rahmani said in an interview with Bloomberg TV. “Our view is that we should not invest in China.”
He cited a number of reasons for his view, including expecting the economy to steadily slow over the next decade. He said China would suffer from weakening of its three traditional pillars of growth: the real estate market, infrastructure and exports. Mossavar Rahmani said the uncertainty in China’s policy decisions and patchy economic data are increasing concerns about investing in China.
Over the past year, Chinese Communist Party leaders have emphasized the importance of information security and limited the data that can be removed from the country. The Bureau of Statistics also suspended some unemployment statistics. On Monday, the Chinese government announced that the country’s prime minister, second only to President Xi Jinping, would cancel the decades-old tradition of holding annual press conferences during important meetings.
“It is not clear what the overall direction of policy will be in the long term,” Mossavar-Rahmani said. “Policy uncertainty typically imposes some cap on the stock market.”
The benchmark CSI300 index fell to a five-year low last month amid rising geopolitical tensions and concerns about the state of domestic demand. It then rebounded as regulators took steps to curb selling and encourage institutional investors to buy.
Mossavar Rahmani said that although short-term economic stimulus measures are possible, China’s real estate sector has not yet found a bottom. “The data is opaque. We don’t really know much about last year’s growth rate or this year’s growth rate,” he said, echoing the concerns of many economists who doubt China’s official economic expansion statistics.
Although China has officially announced a growth rate of over 5% in 2023, “most people think this is not the real growth rate. It was actually much weaker,” she said.
“We do not recommend that our clients move to China at this time,” she concluded.
“All of our clients are asking that question. Given how cheap China looks, people will inevitably say, “Why did we ignore the worst news?” Sharmin Mossavar Rahmani said in an interview with Bloomberg TV. “Our view is that we should not invest in China.”
Expanding
He cited a number of reasons for his view, including expecting the economy to steadily slow over the next decade. He said China would suffer from weakening of its three traditional pillars of growth: the real estate market, infrastructure and exports. Mossavar Rahmani said the uncertainty in China’s policy decisions and patchy economic data are increasing concerns about investing in China.
Over the past year, Chinese Communist Party leaders have emphasized the importance of information security and limited the data that can be removed from the country. The Bureau of Statistics also suspended some unemployment statistics. On Monday, the Chinese government announced that the country’s prime minister, second only to President Xi Jinping, would cancel the decades-old tradition of holding annual press conferences during important meetings.
“It is not clear what the overall direction of policy will be in the long term,” Mossavar-Rahmani said. “Policy uncertainty typically imposes some cap on the stock market.”
The benchmark CSI300 index fell to a five-year low last month amid rising geopolitical tensions and concerns about the state of domestic demand. It then rebounded as regulators took steps to curb selling and encourage institutional investors to buy.
Mossavar Rahmani said that although short-term economic stimulus measures are possible, China’s real estate sector has not yet found a bottom. “The data is opaque. We don’t really know much about last year’s growth rate or this year’s growth rate,” he said, echoing the concerns of many economists who doubt China’s official economic expansion statistics.
Expanding
“We do not recommend that our clients move to China at this time,” she concluded.
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