Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

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<h2>China Diagnostics: First Quarter 2018</h2><p>China has maintained its economic rebalancing to consumption through the first quarter. But this process remains slow, as the Chinese consumer is becoming challenged with higher levels of household debt, and the picture for consumption growth is looking increasingly muddied. Meanwhile, a rise in U.S.- China trade tensions calls notice to the enduring role of trade in the Chinese economy. While the situation is fluid, a collapse of trade anywhere near the magnitude of the post-2008 financial crisis decline would be unmanageable for the Chinese economy, in our view. This time around, with debt/GDP at 261%, a compensatory investment boom is out of the question. We do think Chinese consumers can continue to facilitate a gradual rebalancing from investment to consumption. But under no circumstances is the Chinese consumer prepared to offset a potent double dose of slowing investment and swiftly falling net exports, which would likely prove toxic to the Chinese economy.</p><hr><h2>Key Takeaways</h2><ul><li>Despite a solid first-quarter bump, fixed-asset investment remains far below former levels. Going forward, weaker real estate and state-led infrastructure spending will likely quell any further rebound.</li><li>Headline retail sales growth has remained steady, but other key data points have slowed markedly, including sales volume of key durable and staple goods.</li><li>Financial sector stability has likely been enhanced as shadow banking growth has all but dried up. Yet credit growth remains ahead of GDP growth, and therefore the economy is (still) not deleveraging.</li><li>Our highlighted China stock ideas should remain resilient in the face of escalating trade tensions.</li></ul><p><em>Analysts: China Economics Committee</em></p>

China Diagnostics: First Quarter 2018China has maintained its economic rebalancing to consumption through the first quarter. But this process remains slow, as the Chinese consumer is becoming challenged with higher levels of household debt, and the picture for consumption growth is looking increasingly muddied. Meanwhile, a rise in U.S.- China trade tensions calls notice to the enduring role of trade in the Chinese economy. While the situation is fluid, a collapse of trade anywhere near the magnitude of the post-2008 financial crisis decline would be unmanageable for the Chinese economy, in our view. This time around, with debt/GDP at 261%, a compensatory investment boom is out of the question. We do think Chinese consumers can continue to facilitate a gradual rebalancing from investment to consumption. But under no circumstances is the Chinese consumer prepared to offset a potent double dose of slowing investment and swiftly falling net exports, which would likely prove toxic to the Chinese economy.Key TakeawaysDespite a solid first-quarter bump, fixed-asset investment remains far below former levels. Going forward, weaker real estate and state-led infrastructure spending will likely quell any further rebound.Headline retail sales growth has remained steady, but other key data points have slowed markedly, including sales volume of key durable and staple goods.Financial sector stability has likely been enhanced as shadow banking growth has all but dried up. Yet credit growth remains ahead of GDP growth, and therefore the economy is (still) not deleveraging.Our highlighted China stock ideas should remain resilient in the face of escalating trade tensions.Analysts: China Economics Committee

The Timing of a Trade War Couldn't Be Worse for China