Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
China’s Communist Party turns 100: So what?
“Single-party rule can bring economic success. Communism cannot,” suggests Matt Gertken, vice-president of geopolitical strategy at BCA Research.
Speaking on a recently published and challenging research piece on the 100-year anniversary of the Communist Party of China, Gertken highlights the growing risks in the region and offers comparisons to the successes and failures of the likes of Taiwan, Vietnam and South Korea, and what they may suggest for China in the decades head.
The paper, titled “China’s Communist Party Turns 100: So, What?”, which can be downloaded here , is a thought-provoking read for those actively allocating to emerging markets in the search for growth at the current time. It suggests that China will not overcome the end of the “miracle phase of growth,” like many hope, but rather, will succumb eventually. The paper suggests the macro and geopolitical outlook is “darkening” as a result.
A major part of the reason is that the country’s potential GDP growth is continuing to slow, with the population and labour force both peaking and wages rising, which is forcing China to outsource production to cheaper neighbours. While the party leadership has sought to offset this through the repeal of its one-child policy, this will be a difficult challenge to overcome.
The shift from a focus on massive growth to one of “quality of life” is no doubt a positive, yet the increasingly nationalist foreign policy, such as the trade war with the US, may undermine the benefits by stirring up foreign protectionism from other key trading partners.
BCA highlights the fact that single-party rule is not a bar to economic success, but the “rule of a single person” becomes a liability. He highlights the fact that there are now just five Communist-controlled states in the world, down from over twenty just over a decade ago.
With the growing risk, BCA advocates that investors favour developed market equities over China/ emerging market equities, but for those who choose to invest domestically, to prefer China- and Hong Kong-listed companies over the periphery like Taiwan. Similarly, it favours the strength of the US over the Renminbi.
If you would like to know more, register for a free trial with BCA Research here, or contact Matthew Nabb.
