In the face of China’s economic challenges, JPMorgan Asset Management‘s John Bilton has advised against considering the country ‘un-investable.’ Instead, he sees potential in Chinese government bonds and stock markets.
What Happened: Bilton, the head of global multi-asset strategy at JPMorgan Asset Management, believes that despite China’s economic struggles, it is not wise to dismiss the country as an investment opportunity, reported CNBC on Monday.
"I don't think you can treat the world's second-largest economy as either an alternative investment or un-investable, that would be wide of the mark," Bilton said.
China’s economy is currently grappling with deflation, a sluggish property market, and other economic challenges. However, Bilton argues that these issues do not make China an ‘un-investable’ market. He pointed out that the country’s status as the world’s second-largest economy makes it a significant investment destination.
He also highlighted the potential in Chinese government bonds, given the size of the country’s fixed-income market and the relatively low level of international investment in it.
Addressing the challenges faced by China, Bilton stressed the importance of a cohesive policy approach, particularly in terms of monetary policy, addressing deflation, and resolving real estate issues.
"The reality is, there is still huge stock-picking opportunities in China. There's a lot the economy needs to do to evolve in terms of the financial sector, dealing with an aging population, transportation, services, etc. So this is one where it's probably a case of being more laser-focused on the individual stocks," he said.
Why It Matters: China’s economic challenges have been a topic of concern for global investors. The country’s stock market has seen a significant downturn, prompting the Chinese government to take emergency measures to stabilize it. However, these measures have not been sufficient to address the deeper issues at play, leading to continued skepticism among investors.
Amid this economic turbulence, the U.S. Treasury Department sent a high-level delegation to Beijing to discuss China’s economic policies and practices. The discussions focused on China’s trade strategies, non-market economic practices, industrial overcapacity, and potential risks to the global economy.
Despite these challenges, China’s economy has the potential to become the world’s largest by GDP as soon as 2037, according to a report by the Centre for Economics and Business Research. This potential, combined with the opportunities highlighted by Bilton, suggests that China remains an important market for global investors.
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