Is this the start of a long bull run in China

Is this the year that China beginning a bull run lasting a few years.

Developing markets usually have a tendency to go through an 'S' curve. Growth increases and then decreases at around £4000 GDP per head. China is at that stage now and we have never seen something the magnitude of China go through the 's' curve so it is an unbelievably exciting time.'
This must for sure make it unique. The level and rate of what is occuring taken together with having a command economy where things get finished make it so.

Anthony Bolton of Fidelity in the UK suggests that Japan will be overtaken by China by as soon as the end of the next year to become the second largest economy in the world. It continues to benefit from robust long-term growth and strong centralised government which make it a somewhat better proposition than India, which is tied up by more 'rules and regulations.'

'China is the third biggest economy in the world at this time but only the 10th in terms of stock market size.'

Bolton's optimistic view of China is owing to his supposition that the economies of the West will continue to suffer setbacks as they come out of recession and the credit crisis.

He thinks that the UK and the West is in a point of fast economic upturn but that will slow down next year. To solve today's problem the West has borrowed from the future.

It's not that the western economies are in a very bad business environment but it is awfully probable that they will have below trend growth and face headwinds. China can continue to increase at a comparatively high rate.'

Bolton has stated that China was in the first year of a multi-year bull run and that it would be 'very unusual ' if it was to cease after just one year.

It is likely most of the world's markets will go through a consolidation stage next year. We are in an environment where interest rates will remain somewhat at a low level and governments won't want to dump their support mechanisms too rapidly. If they do it too rapidly, they may perhaps return to recession.

However there could be more upside to come for Western stocks in the short term. This sort of environment provides liquidity so there is more upside to come.'

Bolton said the recent debt issues in Dubai might be an issue for a number of western economies, but would not have a serious impact for China owing to its relative strength.

You can read some further thoughts on emerging markets here. Nothing in this article is to be construed as financial advice. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell securities or financial instruments or an exhortation to invest in in any country, region or sector of the World.

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