Global stocks have dropped at an alarming rate due to investors getting concerned about China’s slowing economy growth. There has been a steep decline in the Chinese stocks and a devaluation of currency that continues to stoke fears that the China outlook is deteriorating. This could spell hard times ahead to its trading partners that include Europe, Japan and eventually the US. It is against this backdrop that Timothy Armour, a portfolio manager, shared his thoughts on the events that are unfolding in China.
China holds about 15% of the gross domestic products in the world and therefore holds a bigger impact on the global economy than before. The well known catalyst for China’s selloff was the unexpected decision the country made concerning the devaluation of its currency which was a huge blow to the financial markets.
A number of developed economies with noteworthy trade links in China like Japan, Hong Kong, Australia and Europe ought to find ways of dealing with the expected export activity decline. According to Timothy Armour, in order for some of these negatives to be offset, commodity and oil prices ought to be lowered to boost the economy.
Timothy Armour’s Perspective on Market Selloff
In response to a question on whether the various reforms that China is taking will bear fruit, Timothy replied that the country’s economy was suffering the pains of a transitioning economy. China’s economy is seeking to transition from one that is closed and investment-led to another that is more open and consumer-led. The government in China controls most companies, banks, fiscal and monetary policy and this according to Tim makes it difficult to analyse the open-market and classic developed economy. This makes the transition rocky but the experts have to find a way of investing in strong companies. Timothy believes that the internet companies in China could present an area of opportunity during this selloff. The internet companies are world-class and have great valuations making them attractive.
Timothy Armour Elected as Capital Group’s Chairman
Capital Group’s board of directors has announced the election of Tim Armour as the Group’s chairman. Tim was the Chairman of the Group’s Capital Research and management Company and the management committee. This change reflects the succession plan of leadership that was put in motion a few years back and it was only formalized when the former chairman passed away. Jim Rothenberg, Capital Group’s former chairman passed on after suffering a heart attack while on holiday. Timothy Armour started his career at Capital Group in its Associates Program soon after graduating from Middlebury College with a bachelor’s degree in Economics.
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