Chinese economy important for European stocks
Investors do not seem to understand how important the Chinese economy is for the European equity markets, mainly for Germany and Northern Europe. Chinese demand for products has been an important driver for growth in these countries in recent years. According to Saunders, there is a direct link between the performance on the stock exchanges and Chinese demand.
- Philip Saunders, co-board member at Investec Asset Management, wants to point out to investors and investors that the Chinese demand for goods is extremely important for the European economy and therefore also for European equities, especially the stock markets in Germany and Northern Europe.
"The extreme weakness of (European) markets last year was connected to the Chinese credit cycle, which now shows signs of turning around."
- The weakness on the European markets last year was related to the Chinese credit cycle. Saunders emphasizes that when Chinese demand declined, European equities also performed less well. But of course the reverse also applies, and that seems to be happening now.
Growing demand
The new fiscal and monetary stimulus measures that Beijing introduced at the beginning of this year are starting to bear fruit. Philip Saunders is therefore quite convinced that the European equity markets will benefit from this in the coming months.
He thinks that the growing Chinese demand for goods and services will have a positive impact on the European economy. China is the second largest trading partner in Europe, China's trade share was 15.3% of European imports and exports in 2017.
Saunders emphasizes that not all companies will be positively influenced, it is mainly about companies that have something to do with Chinese demand for European goods. In addition, many German companies will benefit from this, in 2017 Germany was the largest exporter to China of goods worth 87 billion euros.
Sources: CNBC