China Slowdown Will Pull Down Global Asset Prices – GIC

GIC Pte, manager of more than $100 billion of Singapore’s reserves, said China’s slowdown and credit crunch will affect global investments even as the fund plans to maintain its holdings in the nation.

“It’s systemically important,” GIC Chief Economist Leslie Teo said in an interview yesterday, calling the nation a “key driver for global markets. ‘‘It will affect global equities, including private equity. It will also affect emerging-market equities.’’

China’s ruling Politburo this week pledged to stabilize growth while pressing on with economic reforms to ensure the country meets a target of expanding at a 7.5 percent pace this year, a goal that could be under threat after a second straight quarterly slowdown. Authorities also want to counter mounting debt risks, with policy makers ordering an audit of government borrowings this month and engineering a money-market cash squeeze in June to encourage banks to better manage liquidity.

The nation’s benchmark Shanghai Composite Index (SHCOMP), which doubled in 10 months through August 2009 as the government poured $652 billion of stimulus into building roads, railways and housing, has tumbled about 43 percent earlier this week from its high, destroying $748 billion in market value.

China’s government yesterday pledged to prevent growth from slipping below a ‘‘reasonable” level as manufacturing gauges gave a mixed picture of the strength of the world’s second-biggest economy.

Bloomberg

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