AMY XIE PATRICK: China’s going lower on rates. Here’s what it means for investors | Pendal Group
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AMY XIE PATRICK: China’s going lower on rates. Here’s what it means for investors

China is one of the few countries lowering interest rates. Pendal’s head of income strategies AMY XIE PATRICK explains why — and what it means for investors

You can also listen to this podcast on Apple or Spotify
An excerpt from this podcast

Amy Xie Patrick, Pendal’s head of income strategies:

The first thing to remember about these China authorities is they are not independent monetary authorities as we know them in Australia and the US.

The central bank in China has been lowering interest rates because the economy quite frankly is in a rut.

Most major investment bank analysts expect growth in China will fall to levels not seen over the last decade.

Quite frankly China will struggle to get above the 4% threshold for the next year or perhaps even more.

So the reason why China central bank is easing when the rest of the world is tightening, is because its economic situation looks a lot more dire.

China’s economic cycles over the last decade have largely been self-engineered.

It usually booms to a point where authorities get concerned about whatever is causing that boom.

And typically that’s always been property. China’s property market is quite unique — it is the one place in the world where its top-tier cities have vacancy ratios of around about 25%.

So just think about that.

About a quarter of the properties in big cities like Shanghai and Beijing sit vacant. They’re not even being rented out. There is a huge oversupply of properties.

Property is a store of wealth for the Chinese population as a whole.

But the amount of debt that gets accumulated behind the sector (mainly on the developer side) has gotten authorities worried that debt levels will become unsustainable if they continue to stimulate the economy out of trouble.


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About Amy Xie Patrick and Pendal’s Income and Fixed Interest team

Amy is Pendal’s Head of Income Strategies. She has extensive experience and expertise in emerging markets, global high yield and investment grade credit and holds an honours degree in economics from Cambridge University.

Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia. Pendal won the 2023 Sustainable and Responsible Investments (Income) category in the Zenith awards. In 2021 the team won Lonsec’s Active Fixed Income Fund of the Year Award.

The team oversees some $20 billion invested across income, composite, pure alpha, global and Australian government strategies.

Find out more about Pendal’s fixed interest strategies here

About Pendal Group

Pendal is a global investment management business focused on delivering superior investment returns for our clients through active management.

Contact a Pendal key account manager here


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