China might have the solution when it comes to fixed interest, as the China bond market may offer yield in a globally low yielding world, according J.P. Morgan Asset Management.
Kerry Craig, J.P. Morgan Asset Management global market strategist, said there was still yield to be found and China may be the new bastion for government bond investors.
“While some parts of the world may be suffering from an economic stutter, China’s economic momentum continues to build,” Craig said.
“The supply side of the economy has made up lost ground from the shut-down earlier in the year and indicators such as the growth rate of industrial production is the highest so far this year. The demand side is improving too.”
Craig said the People’s Bank of China (PBoC) had similar tools as other central banks but chose to use them more delicately than the “sledgehammer” approach of the European Central Bank or the US Federal Reserve.
“Perhaps wary of lessons learned after the Great Financial Crisis and the impact that excessive leverage could have on financial stability, the PBoC has carried out a more balanced monetary policy, focusing on targeted support to the real economy, avoiding the use of large scale liquidity injections or close to zero interest rates,” Craig said.
“This approach stands in sharp contrast to the foreshadowing of further easing by central banks elsewhere.
“The Fed’s new average inflation targeting framework...