China myths? Top investor disputes big trends

China’s economic growth ‘rebound’ of previous months has been over-egged, according to experienced Asia investor Hugh Young, while reports of US companies returning home from Asia may also be exaggerated.

‘People have got a bit too excited about stats from the last month or so indicating that China is rebounding,’ said the Singapore-based Aberdeen Asset Management fund manager.

‘We’re quite sceptical about the growth prospects for China… but not to the extent that we think there will be a hard landing.’

Many investors have written off previous ‘hard landing’ fears for China – previously seen as one of the greatest threats to global markets – citing recent growth numbers as evidence that the economy has turned a corner.

‘We don’t see a massive rebound in its economy. It is wrong to see China as a saviour of Asia and of the world,’ Young, a Citywire AA-rated fund manager, added.

Young also seemed sceptical of another trend making headlines around the world: the re-shoring of manufacturing companies back from Asia to the US.

‘Suppliers are going back to the US, but not in a huge way,’ said Young.

He agreed that manufacturers were leaving China as wage costs there have risen rapidly over the past five years. ‘More importantly we have seen a move away from China itself. Yes, some of that will have gone to the US, but indeed also Mexico, some to places like Thailand.'

Young also painted a more nuanced picture of Asia’s prospects over the coming year than many investors. ‘Asia, of course, is part of the global economy and it’s not going to be an easy year,’ he said.

‘The earnings outlook is still cloudy, but corporate fundamentals are sound. We wouldn’t be surprised if it turns out to be another sluggish year for earnings … more important for us has been the fundamental strength of Asian companies.’

Young’s funds include Aberdeen Asia Pacific & Japan  and Aberdeen Asia Pacific , both of which feature in our Citywire Selection list of recommended funds.

You can find out more about Citywire Selection and Citywire Fund Manager Ratings.