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Quarterly Newsletter - Spring 2016

As we indicated in the December issue of our Quarterly Newsletter, the markets were beginning to become obsessed with a wealth of negative news flow just as, in the previous quarter, they had been overly optimistic.  Steering a path between such conflicting emotions can require resolve and, if possible, a dispassionate reading of the financial headlines. 

Thus, when it was reported that China had experienced the slowest growth rate for 25 years, it is important to put this in context.  Some commentators have even started to argue that the rate of growth of the economy (it reportedly grew at 6.9% during 2015) is less helpful as an indicator of financial wellbeing than figures for employment, income, inflation and consumer spending, all of which appear robust. 

It is the quality of growth rather than mere quantity that matters, particularly given that the Chinese economy is so large.  The capital intensive state financed infrastructure projects which drove the 'old China' are undoubtedly slowing but are being replaced by the 'new China' ...