Emerging Markets Funds-Emerging Markets etf

Is this the commencement of a long bull run in China

It is an accepted fact that markets that are developing normally go through an ‘S’ curve. Growth increases and then gets slower at around £4000 GDP per head. China is at that level now and we have never seen something the size of China, an emerging market, go through the ’s’ curve so it is an exceedingly thrilling time.
This must be unique, for sure. The sheer magnitude and rapidity with which this is happening, coupled with an economy where things get done must make it so.

Anthony Bolton of Fidelity in the UK suggests that Japan will be passed by China by as soon as the end of the next year to turn into the second biggest economy in the world.  China is maybe a healthier proposition than India (India suffers from a lot of bureaucratic rules and regulations) due to its ongoing strong secular growth and a strong centalistic government which gets things done.

‘China is the third major economy in the world currently but only the 10th in terms of stock market magnitude.’

Bolton’s confidence on China is also coloured by his faith that Western economies will continue to endure headwinds as they emerge from the aftermath of the recession and credit crisis.

He thinks that the UK and the West is in a stage of rapid economic recovery but that will slow down next year. To solve today’s problem the West has borrowed from the future.

It’s not that the western markets are in a poor business environment but it is awfully likely that they will have slow growth and face headwinds. China can continue to expand at a somewhat high rate.’

Bolton has stated that China was in the first year of a multi-year bull run and that it would be ‘very unusual ‘ if it was to come to an end after just one year.

It is quite probable that most of the markets of the world will go through a re-trenchment phase next year. We are in an situation where interest rates will remain relatively depressed and governments will not wish to dump their support mechanisms too rapidly . If they do it too rapidly, they could return to recession.

However there may well be more upside to come for Western equities in the short term. This sort of situation gives rise to liquidity so there is more upside to come.  It seems that an emerging markets fund in China may be useful for some investors. To see how things are progressing you should check the MSCI emerging markets index.

Bolton said the existing debt issues in Dubai might be an concern for a number of western markets, but not a huge one for China due to its relative strength.