Emerging markets of the world: is everything smooth in China?
China is called the most promising country where international finance will continue to come. The truce played an important role.
The Middle Kingdom with the United States: the benefits of the agreement say both sides. However, emerging markets have their “skeletons” in the closet “that can stop the flow of money.
China’s housing sector is in a protracted crisis. It is caused by an increase in the supply on the mortgage market. Thus, stocks of free housing have decreased. Nevertheless, China does not need credit growth, because soon there will be nothing to sell. However, credit expansion is spreading to where and so non-financial leverage is 260% of GDP. Therefore, real estate problems caused the collapse of the credit system.
China wants the yuan to become the world’s reserve currency. This is not enough for investors, but many are paying close attention to reducing the balance of the country’s current account.
The growth rate of social welfare in the country in 2017 increased by 5% compared with 2016. In 2018, the same year, there were surprises in the form of the drop by 3.5%.
Emerging markets of the world or still the USA?
The portion of 2018 the US bond market competed with assets representing emerging markets. When the global economy slowed down, calmed down in the US.
Not without the influence of the United States, emerging markets showed a 4% decline in growth. In the United States, import volumes are consistently high, but Europe is weakened by lower demand from China.
It can be said that China’s economy is weaker than the American one. In 2016, the Federal Reserve System (FRS) announced an indefinite pause. At the same time, personal spending inflation equaled one with a small percentage. Unemployment exceeded 5%, and the indicator of volatility of world assets was 85%. Now core inflation is 1.9, while unemployment fell to 4%.
At the same time, financial systems do not suffer from oversupply of the national currency of the USA. In the event that the Fed no longer cleans its balance sheets, global economies will get even greater volatility in asset markets.
Observing the events from the outside, we see that the actual state of the economies of the United States, Europe and emerging markets is glossed over noticeably. This was done with the help of liquidity injections and various incentive programs. However, judging by Trump’s decisive action, this practice has ended.
Therefore, it is still difficult to say exactly which markets: the United States, Europe or China, will become the most attractive for international capital – everything can change in unexpected ways.