China’s capital markets will be far bigger than what the Dow Jones Industrial Average (DJIA) is expected to be this year, a senior analyst has predicted.
It will be a far bigger market than the market cap of the Dow or S&P 500, according to Peter Rennert, chief investment officer at Investec.
Rennert said that the Chinese government’s emphasis on the green economy and rapid economic growth in the last decade, coupled with China’s efforts to attract investors and create an environment for private investment in sectors such as clean energy, has helped the Chinese economy expand rapidly.
In China, the capital market is expected by some analysts to surpass the Dow in size in 2020, but the official data on capital flows is not available yet.
“China is a massive market and it’s an enormous market and will continue to be so,” Rennet said.
The capital markets have been a major driver of the growth of the Chinese economic growth and are expected to continue to drive the growth.
China’s capital market has grown by almost $2tn since 2000, according the World Bank, a significant amount.
Analysts expect China’s total capital market to grow by nearly $3 trillion by 2020.
Chinese investors are a major factor in helping to drive growth in other major markets.
Investec said it expects China’s economy to grow at a rate of 6.5pc over the next five years, outpacing the US’s 3.7pc.
While the world’s largest economy has a massive trade deficit, its economy is still growing faster than that of most countries.
China’s GDP grew by 2.6pc in the first quarter of 2020, according official figures.
However, analysts said the figures, as well as a rise in Chinese foreign direct investment (FDI), would have been much higher if China had not been in the middle of a severe financial crisis.
That has resulted in a massive outflow of foreign capital into China and has seen the Chinese yuan weaken by nearly 5pc against the dollar in the past year.
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