Nippon Capital AM says further evidence of a cooling economy in China as consumer inflation eases more than expected in May.
Osaka, JAPAN – Investment house, Nippon Capital AM (Nippon Capital Asset Management J-LLC), has told clients that they should not overreact to fresh Chinese CPI data showing that inflation in the world’s second largest economy eased more than expected in May.
In an intraday research note sent after the National Bureau of Statistics reported that inflation slowed to 1.2% year-on-year compared with expectations of 1.3%, David Silver, Executive Vice-President of Portfolio Management at the firm explained, “Too many investors are forgetting that this economic cooling has been deliberately engineered by policymakers. Rebalancing an economy the size of China’s is no small task and, frankly, investors should take heart from the lower than expected reading because it shows that the People’s Bank of China has more room to maneuver as far as stimulus is concerned.”
Nippon Capital AM says it expects the central bank to continue to cut interest rates further in the coming weeks and months while also relaxing banks’ reserve requirement ratios to spur lending. It also stands by forecasts for Chinese GDP growth to meet the official target rate of 7% this year despite the slowdown.
The government has moved decisively to contain a protracted property boom that gripped several key Chinese cities but some commentators that the gradual deflating of the bubble could turn into a disorderly explosion of bad debt in both personal and commercial sectors of the market.
“There’s no doubt that policymakers face an immense challenge but the Chinese property situation is certainly more manageable than that in which the US housing sector found itself in 2007,” explained Silver.
Nippon Capital AM says it has “taken some risk off the table” by taking profits on several Chinese stocks but it remains poised to buy on dips in prices.
About Nippon Capital AM
Nippon Capital Asset Management J-LLC is a ‘fee only’ financial advisory service. This way you can be assured that we are acting in your best interests at all times. Other services have ‘special’ relationships with banks and financial institutions, from which they are paid a negotiated percentage of any deals that they broker on their behalf. These third party arrangements distort how investments should be dealt with presenting a clear conflict of interest. We do NOT operate in this manner and offer total commitment to our valued clients, without receiving any compensation from third party sources in the industry.
Nippon Capital Asset Management J-LLC operates under the strict guidelines of the Fiduciary Standard of Care (FSC). We are bound to a code of conduct that holds the clients interest in paramount position.
Contact Nippon Capital AM:
1-1-43, Abenosuji, Abeno-Ku,
Osaka-Shi, Osaka Abenoharukas