Daily FNArena News - International

Evidence suggests economic de-coupling between Asia and the West is well and truly underway but GaveKal suggests it will need falling food prices for financial markets to also de-couple.

It is generally considered China has an almost endless supply of rural workers willing to move to the cities but a recent academic study suggests this is not the case.

As expected bad weather conditions have impacted on CLSA’s monthly China Purchasing Managers’ Index.

Even allowing for the impact of recent bad weather DBS Group notes inflationary pressures are becoming the biggest threat for Chinese policy makers, so no change to tighter monetary policy is expected.

The Bank of Finland is forecasting Chinese growth will ease to 10% this year and 9% by the end of the decade, with inflationary pressures a major threat to the outlook in its view.

Somewhere in the world there’s at least another US$300bn in subprime losses we don’t know about yet.

China’s growth is tipped to slow this year but according to DBS Group this will make for more sustainable growth longer-term, making it a relatively safe haven in the current uncertainty.

As the Chinese government continues its fight against inflation its policy measures are becoming more restrictive and this has GaveKal cautious on the outlook for Chinese equities.

While GaveKal reiterates its lack of concern over a Chinese slowdown, Dennis Gartman has received some disturbing anecdotal news.

GaveKal fears the days of China’s deflationary impact may be over.