By Andrei Skvarsky.
Switzerland’s Lombard Odier, one of Europe’s largest private banking firms, says declining Chinese growth is one of its major concerns from the investment point of view but hails what it sees as China’s determination to move to“better quality” growth, namely from investment-led to consumption-based growth.
Among other things, the Geneva-based bank praises China for “resisting the ‘old’ habit of boosting growth through currency devaluation”. This “is probably the best proof of China’s willingness to be a team player in the global rebalancing game,” Lombard Odier says in its Investment Strategy Bulletin.
There are obstacles to this, however, the firm warns. These include a massive domestic debt, artificial support for state-owned enterprises, and surging house prices. Moreover, the opening of Chinese markets “could lead to outflows”, and “any loss of control on that front could prompt Chinese authorities to again resort to currency devaluation”.
Lombard Odier, a seven-generation family business set up in 1796, offers a range of services such as wealth management and consultancy. It has a network of 25 offices in 18 countries, including emerging markets.