Conflicting economic data coming from China has Aberdeen Asset Management cautious over its market expectations.
Although Aberdeen remains confident that emerging markets will continue to lead global growth, it has reservations on certain market expectations resting on China to lead the growth over the medium-term.
“While conflicting data is coming out of China, we are cautious about its growth prospects over the next 12 to 18 months,” Aberdeen senior investment specialist Stuart James said.
While industrial output is rising, electrical demand is falling, iron-ore imports are increasing but steel production remains static and industrial output is said to be rising as exports fall, James said.
“There is just too much data that doesn’t tally,” James said.
The concerns are in addition to those regarding the rate of monetary expansion in China, according to James.
“In particular, we are concerned that directed bank lending may prolong the removal of excess capacity and expose the banks to potential non-performing loan issues down the track,” he said.
Meanwhile, it is expected that emerging markets with large domestic economies, such as Brazil and India, will now be at the forefront in growth, James said.
