Blackrock comments on China echoing broader market views:
- The People’s Bank of China has been cutting rates but it’s not in the same boat as the Fed. It’s facing weak consumer demand, excess production capacity and deflation – based on broad measures of inflation – that could become entrenched.
- The lack of fiscal and other policy support casts doubt on if the economy will hit this year’s growth target.
- Export activity has been supporting growth, so it will be key to watch for any signs of weakness.
In Chinese equities:
- valuations are low relative to other regions but given the tough macro outlook, we prefer developed market equities over emerging markets and China.
- We are neutral. We see risks from weak consumer spending, even with measured policy support. An aging population and geopolitical risks are structural challenges.
