Rock around the credit clock – Societe Generale research

How can such a massive high-speed train take a break without derailing? Societe Generale Private Banking analyses the new Chinese market scenario.

After two decades of impressive economic development that saw the country’s standard of living increase six-fold, turning the 11th-largest
economy into the 2nd-largest, China is now taking a breather. How can such a
massive high-speed train take a break without derailing? Societe Generale latest research asks.

According to SG, only time will tell. “In the meantime, we cannot help but reflect on the fashion of ‘predicting a China crash’ that has flourished in our industry over the past 10 years.

“Vociferous market commentators have at various points in time called for a Chinese ‘crisis’ ‘hard landing’ or ‘meltdown’ citing a ‘credit bubble’ ‘real estate crisis , landing meltdown , bubble , craze’, etc. No doubt if events worsen, these pundits will soon boast of their forecasting abilities and praise themselves for having predicted correctly, overlooking the fact that they have been wrong for five or six years,” the research said.
However, although sharing most of such views, Societe Generale said it does not expect a hard landing of the Chinese economy: “We will not argue against evidence of a structural weakening in Chinese growth potential and the likelihood of a bumpy road ahead. In fact we share these
expectations, except for the hard landing,” the reposrt reads.

Click here to read full research [asset_library_tag 7161,SGPB Strategy Outlook]

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