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Monday, March 14, 2016

A rocky start to 2016

China spoils the party

Stock markets fell sharply earlier today, particularly in China where ‘circuit-breakers’ intervened to halt trading for the second time in a week. Against this backdrop our independent economic consultant Peter Stanyer comments:

‘The last few days have seen a rocky start to 2016 for global equity markets, and even well-balanced funds are likely to be showing some modest negative returns in the past week.

The drama is coming from China, now by some considerable margin the world’s second largest national economy after the USA. A weaker-than-expected Chinese economy is coinciding with a determined government-led anti-corruption drive, which seems to have unnerved parts of the business class and led to substantial flows of money out of the country.

Globally this has been seen in heightened stock market volatility, but also a welcome confirmation of the safe-harbour role played by gilts and other high-quality government bonds. These are the types of squalls that investment strategy is designed to pass through.’

Peter Stanyer, independent economic consultant to The Financial Planning Corporation LLP
January 7, 2016

Peter is the author of The Economist Guide to Investment Strategy, 3rd edition, Profile Books, 2014.  The views expressed are his own personal views, and do not constitute advice to buy, sell or hold any investment.

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