Chinese Economy Leads to Concern Among Hedge Funds

December 25, 2011 James Heinsman Hedge Fund News

Though the eurozone crisis is far from over, hedge funds and analysts have begun shifting their attention to a different, looming disaster emanating from China as its economy starts to slide.

The Emerging Sovereign Group, a $1 billion hedge fund, recently told its clients: “We have a gathering sense that the next act of this rolling global crisis may well play out in the East.”

Proof of this is the constant falling of the Shanghai Composite, which has lost 27% of its value since April.

“Even though an aggressive stimulus program allowed China to sidestep a post-Lehman recession, rendering events there, for a time, secondary to developments in the US and Europe, the Chinese economy could soon take centre stage,” ESG said.

ESG is not the only firm with concerns.

Brevan Howard, the second largest macro hedge fund in the world, said: “In China, both the official and the HSBC PMI suffered significant losses in November. Worryingly, domestic demand was showing the bulk of the weakness according to both metrics.”

China, Debt Crisis, Economy, Emerging Sovereign Group, ESG,

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