Global stocks seem to face recession in recent years than ever before leading to a slow economic growth in China. Chinese currency is facing devaluation as well, and it is feared that investors and other global trading partners such as Europe, Japan, and U.S. might opt out of business. In the verge of trying to come down the investors, China lowered interest rates and alleviated the reserves requirements on banks. Below are the views of Tim Armour on the unfolding events in China.
Views On Market Instability Ignited By China
Armour said that the United States has a stable market despite having sparkled its valuation that affected different companies and industries. To him, the recent action by China is not an unexpected event and instead it is a correction of the markets by removing the excess money in the economy.
Perspective On The United States Economy
Armour says that the U.S. economy is not growing in line with people’s expectations. Many believed that the Federal Reserve would lead to a rise in interest rates with time, but Tim firmly believes that increasing rates is a good move because if they don’t, investors will continue taking undue risks. He says that it is a bold move that will benefit the economy in the long run because more capital will be directed towards investments that bring adequate returns and banks as well will improve the margin earned.
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Expectations Of China’s Turning Point
China has some reforms to implement and challenges to handle so as to save the global economy. Timothy says that the transition China is undergoing might be painful but eventually it will bring about the victory to its economy. Apparently, China controls many levers in the economy, and it’s hard for them to utilise tools that are usually used to analyse an open market developed economy. Armour says that everyone should get ready for the rocky transition as they invest in reliable companies.
Opportunities Brought About By The Selloff Idea
Timothy says that a great opportunity lies in Chinese internet companies. Being world class companies makes them more eye-catching and will gain characteristics of other large corporations in the same industry especially like the ones in the United States. Apparently, the correction raised these companies to a higher level and received high valuations.
Impact On Multinational Companies
Yes, many companies get a significant part of revenues from China, but Armour says that despite the slow growth rate China is experiencing at the moment, it will grow faster than most developed countries in the long run.