Investors are beginning to ease their hand off the escape hatch button as indicators seem to be validating bullish positions and aleviating fears of a catastrophic event that would disturb the global emergance from economic hibernation. Despite concern that the resurgence of populism around the world, including Trump’s election in the US, would hasten a contraction of global trade, the reverse is happening. Trade activity is picking up and many feel US domestic policies will feed that trend, while Washington quietly backs away from more hawkish positions on trade.
Against this backdrop the Financial Times spoke with head of emerging markets cross-asset strategy at UBS, Bhanu Baweja, who threw a little bit of cold water on the excitement surrounding emerging market resurgence. Baweja argues that the sustainability of EM growth will rely on the stability of China’s housing market, which has been controlled carefully by the government, but property prices may have reached a peak. Don’t let a looming downturn in the housing market keep you from joining the party, he says, but it might not last. This is also an old refrain. Not a day goes by when there is not somebody somewhere expecting a China housing bubble to burst. For some, the Chinese sky is always falling.