View more on these topics

China scare is not a bear, says Mobius

The sharp fall in Chinese stockmarkets last week is short-term profit-taking rather than the start of a bear market, says emerging markets guru Dr Mark Mobius.

The sell-off in the Shanghai and Shenzhen stockmarkets followed concerns ahead of the National People’s Congress meeting this month that the government was planning a crackdown on foreign ownership or the introduction of capital gains tax on shares to cool market exuberance.

This triggered widespread selling on a global scale that hit every major market as investors rushed to bank profits.

Templeton Asset Management executive chairman Mobius says these sorts of corrections should be expected after such a strong bull run that has seen the Chinese A-share market rise by over 190 per cent since July 2005.

He says: “The trading prices of A shares have nearly doubled in the last seven months, making them more vulnerable to declines and volatility. After the fall on February 27, A shares rebounded by nearly 4 per cent on February 28. Asian and European markets, however, recorded further declines of 1 to 3 per cent.”

Threadneedle Investments Far East and Asian equity fund manager Gigi Chan expects the correction to be short-lived, arguing that the long-term case for China remains strong.

She says: “The short term may see further volatility from Chinese stocks. From a longer-term perspective, however, the case for the market remains strong. We believe that corporate earnings’ growth is likely to remain buoyant enough to justify valuations. Structurally, the quality of the market is improving all the time. There is greater transparency and corporate governance is now much stronger.”

F&C head of asset allocation Paul Niven says: “In our view, this episode probably has a little further to run but should not change investor positioning materially.”

Recommended

Fixed expression

In today’s market, it is very difficult to find an investment offering a fixed income of 7 per cent a year tax-free without much risk.

Moneyfacts move

The news that Moneyfacts could move into competition with Mortgage Brain and Trigold could be good news for brokers.

Bank of England maintains interest rates at 5.25 per cent

Weakening economic data and falling inflation prompted the Bank of England Monetary Policy Committee to maintain interest rates at 5.25 per cent.Pressure for further rate hikes has slipped following mixed economic data that has seen high street retail sales falling at their sharpest rate in four years and inflation falling back from December’s 3 per […]

IFAs too tough as chasers switch to banks and PPI

Leading claim management companies are now turning down claims against IFAs as they believe they are unprofitable and are instead focusing on payment protection insurance and bank charges.Brunel Franklin director Ian Allison says the firm has decided it is not commercially viable to go after sales made through IFAs due to the time and expense […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com