Australia’s largest pension says China boom times have finished
China’s latest bout of stimulus may help stabilise the country’s property crisis but investors should position for the end of the economy’s boom years, says the investment chief of Australia’s largest pension fund.
“The big boom times in China growth are gone,” Mark Delaney, chief investment officer of AustralianSuper, which manages more than A$341-billion, said at a Bloomberg event in Sydney on Tuesday. He said the economy’s annual growth rates of near 9% were in the past, and he was instead expecting still “not too bad” numbers starting with four or five.
China has unveiled a raft of stimulus measures including a massive package to shore up its beleaguered property market, lowering borrowing costs on as much as $5.3 trillion in mortgages and easing down-payment requirements for second home purchases to a historical low.
“The authorities have been really keen to try and keep house prices steady,” Delaney said. The support measures are about trying to ensure the property slump “doesn’t feed back heavily into consumer spending and start that negative cycle you’ve seen in other housing busts.”
Housing slumps in other countries have taken “decades to work their way through,” Delaney said, citing AustralianSuper analysis of crises with similar characteristics, such as Japan in the 1990s.
“Governments all try and stabilise it, but you need to really work off the structural oversupply,” he said. “So I think that’s really going to be a pretty pronounced impact upon China.”
Markets are watching for further stimulus from China, with investors hopeful the government will deliver on its promise of more fiscal support. At a briefing on Saturday, Finance Minister Lan Fo’an vowed new steps to support the property sector and hinted at greater government borrowing.
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