NEW YORK, March 31, 2016 /PRNewswire-USNewswire/ -- The "Global Markets" panel on the first day of Quinnipiac University's sixth annual Global Asset Management Education (G.A.M.E.) Forum in New York described a relatively healthy international economy—with particular strength in India—and perhaps an excess of concern about China's performance.
Ralph Acampora, senior managing director at Altaira, Ltd., who moderated, said that earlier generations of investors "thought the world revolved around Wall Street, but then they were hit by a BRIC," referring to the growing economic power of Brazil, Russia, India and China.
Abby Joseph Cohen, senior investment strategist and president of the Global Markets Institute at Goldman Sachs, said that the world is now opened up for investment, and that markets have benefited from that international trend. But she said that emerging market stocks "took it on the chin" and became undervalued, because nervous U.S. investors tend to bring their money home.
Cohen said there is an overabundance of anxiety about China, which is now experiencing six to seven percent annual growth—down from the phenomenal 10 percent rate it experienced for two decades.
"China was investing in infrastructure, building bridges, tunnels and roads," Cohen said. "That investment helped to create a large middle class, and now the government is saying it has to build up the domestic economy. History tells us that leads to a slowdown, but it's still the world's second biggest economy. Europe would be thrilled with growth above one to two percent, and Japan is close to zero. China is the anchor economy in Asia. The only country with higher growth is India, at eight percent."
But complete confidence in China has not returned. Kathleen Hays, host of the "Taking Stock" program on Bloomberg Radio, said that "the bubble in the Chinese stock market deflated quickly." That raised the question of whether heavy investors would be able to cover their margins. And the Federal Reserve's hesitancy in raising interest rates, she said, has been caused in part by concern about global stock markets, with downturns rippling through the U.S. economy.
"China seems on track now," Hays said. "But big Chinese banks have cut their dividends. And there's still shocks from the massive cut in oil prices. The market volatility we've seen in the U.S. relates to China in a very big way."
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SOURCE Quinnipiac University