Why the market is overplaying China’s troubles

By James Dowey, Chief Economist and CIO, Neptune Investment Management

The current volatility in global markets has precisely the same cause as had the major bout of volatility last August. As the Chinese RMB is pegged to the US dollar, US monetary policy gets exported to China. This means that a strong US economy and a weak Chinese economy give rise to a tug of war at the centre of the global financial system.

However, I believe the market’s doom and gloom is over the top. This is because the policy solutions are simple, feasible and being executed by the US and Chinese authorities. They are threefold and work best in combination.

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Important Information: Investments Risks
The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. These are Neptune’s views and as such this document is deemed to be impartial research. Any forecasts, projections or targets are to provide you with an indication only and should not be relied upon. Investments in emerging markets are higher risk and potentially more volatile than those in established markets. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. The content of this article is formed from Neptune’s views and we do not undertake to advise you as to any change of our views. Neptune does not give investment advice and only provides information on Neptune products.