Asian Stocks Will Recover From China-Sparked Rout, Says Alfred Lettner

Vienna, Austria, February 17, 2016 (Newswire.com) - Since the turn of the year, there has been a lot of volatility across global markets, driven in part, by fears of a slowing economy in China.

"When China fell 7 per cent on January 4th, all the other Asian stock markets were down 2 to 3 per cent. This is ridiculous," Simon Conway, of Alfred Lettner, the family-owned, financial advisory house based in Austria said.

"What matters for Asia is whether the fall in stocks is driven by a deterioration in China's economic fundamentals or stock market-specific factors," Mr. Conway said. "This time round, it's more of the latter."

Market watchers have cited a toxic mix of uncertainties for the most recent slump, including weaker-than-expected manufacturing surveys out for China, a weakening Chinese yuan, anxiety over the looming expiry of a share sale ban.

"If the weakness in Chinese stocks is driven by a deterioration in fundamentals, then impact on other markets will be quite high, which was what we saw last August and September. But this time round, a lot of it is stock market-specific factors like the share sale ban so it is less relevant for the rest of Asia-Pacific," Mr. Conway said.

There are other analysts who share the same opinion.

Michael Appleton, Senior Investment Manager at Alfred Lettner, said: "I think one important fact that we need to realize is that China's market gyration is not a reflection of what's going on in its real economy. There really isn't much correlation between the two so first of all, we don't need to panic about these gyrations."

Mr. Appleton added that there are signs indicating that the economy is starting to stabilize so "there is no need to do anything too dramatic".

"People say whatever happens in January is usually a sign for the rest of the year, we want to dispel that," Mr. Conway added. "We think we should see some stabilization soon." ​