investors at the annual ashburton conference had much to say on china and eu reform
China is set to become the strongest economy in Asia, K P Ho, chairman of the Banyan Tree Group, told delegates at the annual Ashburton conference last month.
Ho said: 'China is going from strength to strength and looks increasingly like the only engine of growth in a shaky global economy. While it is by no means a poster boy for democracy, its reforms, particularly at the village and city provincial levels, have been serious and far reaching, pushing it further towards the rule of law.'
China is now one of the largest consumer appliances and white goods producer in the world. It produces more than half of the world's cameras, 30% of its air conditioners and televisions, 25% of all washing machines and 20% of its refrigerators.
Ho pointed out that, in less than 10 years, China has become the world's third-largest IT hardware producer and will soon become the second-largest producer of micro-chips.
He expects more than 80% of the world's computer peripherals and motherboards to be made in China by the end of next year.
However, Ho believes there are still problems ahead. The annual 8% GDP growth required to keep China stable may be difficult to achieve, he said.
Unemployment is rising because of near-bankrupt state firms, the financial sector remains weak and corrupt, with huge amounts of non-performing loans, and growth is slowing in both the domestic and housing market.
Other speeches at the conference focused on the EU, growth in the global economy and financial bubbles.
Lord Britton, vice-president of UBS Warburg, also spoke at Asburton's conference, focusing on reform in the EU. He said the addition of 10 countries will be of fundamental importance. As a result of assistance received from the EU, these countries have experienced growth rates in excess of the countries in Western Europe, he noted.
Britton pointed out that 10 countries joining the EU will put pressure on agricultural reform as well as political. The European Commission, the Council of Ministers and European Parliament are not capable of handling an EU of 25, he argued, as it will force the EU to modernise itself, to become more streamline and more able to take decisions.
Peter Lucas, global investment strategist at Ashburton, spoke about how the global economy will show signs of improvement in 2003. Equities are set to experience a recovery that will last 12 to 18 months, he said.
Bonds will be categorised as high risk and the US dollar will still be in favour the next five to six months.
Lucas said the risk/reward profile of equities has changed considerably during the past few years. He attributes this to the return to more normal trading patterns in 1980 and the bursting of the bubble in the late 1990s.
As result of this, he said, many investors will feel the need to reassess their portfolios and reduce their exposure to high-risk asset classes.
Ian Ling, director at Ashburton, discussed financial bubbles, bear markets and low interest rates.
He said bubbles occur after a period of expansion and are caused by people's reaction to and interpretation of events. They are usually associated with new technology or discovery and there is a long period of recuperation.
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