“There is a bubble in the housing market in China. There is no doubt about that. But it may not burst as dramatically as it did in the U.S.,” said Yulong “Clark” Li, global investment research director at Balentine, a money manager based in Atlanta. “For 2012, the probability of a hard landing in China is still pretty low.”
The stock market in China tends to rally after the Chinese New Year, says Clark Li, Global Investment Research Director at Balentine, a $1 billion advisory firm in Atlanta. “We are bullish towards emerging markets this month,” says Li. Balentine’s models update monthly. February the model went from bearish EM equity compared to developed markets, to bullish.
The recent turbulance in Washington and on Wall Street have prompted many to ask if the sun is now setting on the United States. Optimists, like Warren Buffet, often argue that since 1776, it has always been a mistake to bet against the U.S. Yet history offers evidence that no nation is immune to a change of fortunes. In the 1500s, today’s “emerging world” actually generated well over half of global GDP.
In the weeks since Washington increased the debt limit, the markets have been a roller coaster ride. Continued fallout from the political debacle of early August and disappointing data from housing, manufacturing and employment sectors have all come together to create the perfect storm for a double dip recession. At Balentine, we have spent the last 18 months preparing portfolios for such an event and are positioned to weather the storm, by including protection from a sustained low interest rate environment, the threat of inflation and the economic struggles of the developed world.
The world is full of risks-some of them important to investors; others, while perhaps devastating to a group, may not be critical to the markets. At Balentine we maintain a running list of perceived or possible global risks and work to interpret their impact on client portfolios.
Speaking of the Chinese currency to The Wall Street Journal, Balentine’s Adrian Cronje notes, “It’s too early to tell if this (potential currency revaluation) is a fundamental regime change. There is a lot of speculation about whether they are going to follow through on this.” Read the article here.