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China’s Impact on the Emerging Markets

05 March 2018

Bloomberg has an article on China’s rapidly growing economy and impact on emerging markets funds. China now accounts for 27% of the MSCI Emerging Markets Index, up from only 9% ten years ago. One of the major reasons for this ascent has been the spectacular growth in average GDP per capita, which has increased 13% per annum for the past ten years. Recent government initiatives to consolidate power under Premier Xi may cause some investors to be concerned. However, the article notes that China’s stock markets has a low correlation (.36) to the rest of the emerging stock markets. So what happens in China may stay in China.

For a different perspective on China, the Financial Times has a report on the increasing concern about China’s massive growth in corporate and personal debt. The Times is concerned about the ability of China’s households to service the large debt levels moving forward.