Concerns about declining economic activity in China and continued high US interest rates have left global stock markets on edge.
Hong Kong’s Hang Seng index closed 2.1 percent lower on Friday and is down nearly 21 percent from its peak in January, after Chinese real estate giant Evergrande filed for bankruptcy protection. It comes after Chinese Country Garden, the second largest real estate company in China by sales, announced earlier this week that it had stopped paying interest.
At the same time, the broad European Stoxx 600 index fell by nearly 3 percent in the past week, while US stock exchanges also fell in the same period. points down.
Russ Mold, director at AJ Bell Investment, wrote in an email to clients, As seen by CNBC.
Recommend defensive stocks
Emmanuel Cao, European strategist at Barclays Bank, believes that stock markets are facing what he calls a “perfect storm”.
“Strongly higher interest rates, weaker economic data points in China, lower liquidity this summer, and trade boycotts among consumers,” are some of what the strategist notes.
Cao suggests, according to CNBC, that his business owner was too sanguine in his view of China, given how little political action from China was notified. To boost stimulus packages at the end of July.
“We recognize that sentiment on China will likely not be able to turn around on its own, unless there is a significant stimulus package,” the strategist wrote.
Therefore, the Bank of England recommends that investors tilt their portfolios towards cyclical and defensive stocks, and towards stocks that trade at what is considered a discount to fundamental values.
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