The worst is over?

HONG KONG : Despite recent signs of a slowdown in China, some economists believe that the worst is over for the world's number two economy.

According to economists at HSBC, fears of a hard landing for China have been overplayed.

Amid sluggish demand for exports from Western economies, growth in emerging markets such as China and Brazil lost steam in the second quarter of this year.

The HSBC Emerging Markets Index fell to 53 in the second quarter of 2012 from 53.6 the previous quarter.

But with a reading of 50 or above indicating economic expansion, HSBC is taking a positive look at the numbers.

Frederic Neumann, co-head of Asian Economics Research at HSBC, said: "Is there something happening in Asia that all growth rates are coming down? And the answer is yes. Our growth rates are coming down, we are not going to go back to the previous growth rates. But we are also not going to go back to a Japanese or European-style growth rate, we are going to be at a fairly comfortable pace." 

All eyes are on China, with weaker trade data out this week raising fears about a prolonged economic slowdown.

But HSBC said the worst is over for the world's second largest economy.

It believes that China's economic growth bottomed out in the second quarter, with 7.8 per cent year-on-year growth.

And it expects to see a pick-up in the second half of the year, taking full-year growth to 8.4 per cent.

Mr Neumann said: "Domestic demand is still expanding. Car sales, for example, have picked up. There is evidence that real estate market activity has started to pick up again the last few weeks. 

"So we absolutely do not think there is a risk of a hard landing in China. And we do think the Chinese authorities will do everything in their power to maintain growth at a reasonable speed."

HSBC expects China's central bank to announce another 200 basis-point cut in the reserve requirement ratio for banks before the end of the year.

As for the region as a whole, the lender is forecasting a 6.8 per cent expansion for Asia-ex Japan this year, and 7.5 per cent growth in 2013.

HSBC said the days of double-digit growth for regional economies are over, at least for the next five years. 

But economists said that a slower pace of growth is a good thing, as it will mean less volatility, especially for financial markets.


Source fromhttp://www.channelnewsasia.com

STI has remain uptrend for two weeks due to several good news like Europe crisis easing and not too worst US economic data. Now the expert believes the worst is over for China. Can STI boosted above 3000 points and create another uptrend wave? Now i start to believe it will happen soon. The world economic is not doing well, hence i will treat this as a short term uptrend wave. This can be a good chance to let go your unpleasant portfolio and re-structure it. if it happened, do not greedy, earn less, let go and standby your cash for the forthcoming downtrend; shopping at lower price is the best, keep your eyes on blue chips!