Investors need to pay closer attention to China

Posted at 12:27 PM, Oct 10, 2018
and last updated 2018-10-10 14:27:04-04

Investors can’t afford to ignore China.

“I think it is a really important factor for small, medium and large investors to be paying closer attention to,” Mark Howard, Senior Multi-Asset Specialist at BNP Paribas, told CNN international correspondent Paula Newton on Wednesday.

The trade war between the United States and China is already hurting Chinese stocks. The benchmark Shanghai Composite Index is down 17.6% this year. And the International Monetary Fund cut its growth forecast for China this week, saying that tariffs will hurt the country’s economy next year.

Howard said slower growth will hit investors with stakes in Chinese companies in the short term.

But he added that China still has “plenty of tools to engineer a recovery.” And when that happens, those investors could win.

China has been pumping more cash into its flagging economy to spark growth and mitigate effects from the trade war. Chinese officials have also turned to tax cuts, infrastructure spending and looser monetary policy in an effort to spur more economic activity.

Experts warn that may not be enough.

No matter what, investors need to keep their eyes open as more Chinese debt equity and debt securities are added to the global stock market, Howard said.

Howard also warned against complacency in US markets.

Investors have to be “more vigilant” and “discerning,” when putting together their portfolios, he said. Pockets of volatility mean investors “can’t just ride winners because they won.”

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