SINGAPORE, Sept 28 (Reuters) - China's economy is expected
to grow at a much slower pace of about seven percent over the
next decade, but its stock market still has the most attractive
upside among "BRIC" countries, according to Jim O'Neill,
Chairman of Goldman Sachs Asset Management.
"China is in the early stages of going from a long period
where it was all about the quantity of growth, into an era where
the focus is on the quality of growth," O'Neill told a news
conference in Singapore.
O'Neill, who coined the term "BRICs" to describe the
emerging countries of Brazil, Russia, India and China, said
markets have not fully factored in the next decade of slower
growth for the world's second-largest economy.
That, he said, explains the underperformance of China's
stock market.
After three decades of breakneck development that saw annual
growth average of 10 percent, China's government is trying to
steer growth lower to complete structural economic reforms.
"We're all used to the drug of 10 percent growth and those
days are behind us," said O'Neill.
As China makes its transition, O'Neill expects
consumer-related and healthcare companies to benefit, while
those that depend on heavy industry production and heavy
industry commodities were likely to lose out.
Investors are concerned over the timing of China's planned
slowdown, as it could be derailed by the global economic
downturn that has sapped overseas orders for exports from
China's vast factory sector.
China's CSI300 Index has fallen 2.2 percent so far
this year, While the MSCI Asia Pacific ex-Japan's
12.5 percent rise in the same period.
O'Neill said he expected China's A-shares to rise again over
the next year, and disagreed with the what he described as a
growing consensus that Chinese equities would never rally again.
However, he saw China's economy continuing to struggle in
the near term, and said the slowdown in growth may have spread
into the July-September period, which would mark a seventh
consecutive quarter of slowing growth.
"It's too soon to say a clear recovery is on the way. The
Chinese economy still seems to be softening and it's possible
that the economy may be weaker in Q3 than it was in Q2," O'Neill
said.
"There are not many signs yet of a big easing in financial
conditions, which usually is a good leading indicator of
momentum."
China is not alone in facing slower growth. Goldman Sachs
Asset Management expects all "BRIC" countries, except Brazil, to
see lower growth than they did in the last 10 years.
However, their collective share of the world economy will
still rise, and O'Neill noted that recent policy reforms that
some countries like India and Brazil have introduced are a good
sign.
India introduced sweeping reforms two weeks ago, such as
raising the price of heavily-subsidied diesel, aimed at shoring
up government finances and attracting foreign investment to
revive economic growth.
(Editing by Simon Cameron-Moore)
Source: http://news.yahoo.com/goldman-sees-chinas-growth-slowing-7-pct-next-075158751--business.html
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