China avoids asset bubble
Despite fears of an asset price bubble, the China A share market ended the September quarter down 12.5 per cent following a steep climb earlier in the year.
The drop in share prices is a “healthy correction”, according to AMP Capital Investors’ quarterly report, following a period of investor fear that asset price inflation would lead to a bubble.
“The China A share market climbed sharply in the first seven months of the year, however, in August concerns began to arise that perhaps overheating was now a more pressing issue,” the report said.
AMP noted the contribution of the Chinese Government’s 2008 fiscal stimulus package, which improved the local economy and helped “to cushion China” against the downturn.
The quarter also saw “a steady increase” in initial public offerings (IPOs) activity on the share market, and AMP further noted strong retail sales growth, which is “continuing at historically high levels, buoyed by very strong real-income growth, mild deflation and the increasing urbanisation of the population”.
AMP noted “strong recovery” in the investment property market but expressed concern that progress would be slowed down due to tight measures from the Government.
AMP said the Chinese share market “remains attractive on a long-term basis”.
Recommended for you
ASIC has announced the Administrative Appeals Tribunal has upheld a former NSW-based adviser’s permanent ban following his conviction for fraud offences.
The Financial Advice Association Australia has released its pre-budget submission, including six key items to help reduce the cost of professional advice and increase its accessibility.
Phil Anderson, general manager for financial advice at the FAAA, believes the CSLR levy could reach $100 million if Dixon Advisory complaints are allowed to continue.
Proposed legislative changes to safe harbour duty could result in advisers having reduced professional indemnity costs, a joint submission by seven major licensees said.