China meltdown: managers respond via Facebook
All equity markets are set to have a negative day, according to comments posted on Facebook by Stockholm based Tundra Fonder, just one of a number of managers that have reached for social networks to respond to sharp falls in Chinese and other equities.
Tundra Fonder in Stockholm said on its Facebook account: “Generally rough day across global equity markets and frontier markets not spared. Lower commodity prices continue to take its toll on the net exporting countries and Kazakhstan’s devaluation during the week does not help. Nigeria next? No markets spared today however with both Pakistan and Vietnam down almost 2% each. USD again weakens against EUR and SEK which hits another 1% on most of our unit classes.”
Franklin Templeton Investments portfolio manager Michael Hasenstab recently outlined his views of the dangers linked to debt levels in China in a video that has been put top of the manager’s Facebook account today.
However, full consensus is yet to be reached in terms of what recent events involving China, its currency and domestic equity market may mean for investors.
Fidelity Worldwide Investment noted in a post last week that the problem of weaker expectations itself could impact returns from emerging markets: if currencies weaken, then domestic demand weakens, which undermines the key factor investors hope will underpin faster growth in these markets. (https://www.fidelity.co.uk/investor/markets-insights/daily-investment-insight/details.page?whereParameter=daily-investment-insight/market-exodus&utm_source=facebook.com&utm_medium=socialmedia&utm_campaign=2015-08-19_market-insight )
However, Matthews Asia noted of China’s currency policy adjustment and the subsequent impact on the RMB/$ exchange rate that: “The adoption of this mechanism and the resulting short-term depreciation in the renminbi will benefit China’s exports and its economy in both the short and the long run. But to give too much credence to the “currency war” or “mercantilism” narrative misses the big picture.”
“Over the long run, a more flexible exchange rate is going to instill a great deal more discipline and risk management on the part of Chinese corporates.”
Ongoing comments are also being published via Twitter feeds, with the hashtags #BlackMonday and #ChinaMeltdown trending highly on the platform.