The ox is off to a flyer. While the world’s stock markets are down 9 per cent this year, China is up by about the same amount. The usual January uplift has eluded almost every major exchange. Only Sri Lanka, Norway and a few South Americans have gained more than 1 per cent in 2009.
Shanghai’s performance comes in spite of a range of discouraging global data in the run-up to the New Year festivities, and an emerging consensus that China will be lucky to achieve 5 per cent growth this year, never mind the magical 8 per cent. So what lies behind it? One theory is that China is relatively immune to renewed fears over the health of western banks – Citi is now worth less than one-ninth of ICBC – and deflationary busts in the eurozone. Investors can, therefore, start pricing in a rebound spurred by a big fiscal and monetary stimulus, negative real rates and the competitive renminbi.
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