One of the main questions vexing markets, is the degree to which the coronavirus will weigh on growth in the world’s second largest economy. With a fraction of the Chinese economy functioning at this point, certain businesses are finding it increasingly difficult to meet their financial obligations. Back in 2016, President Xi Jinping embarked on a deleveraging campaign that led to a crackdown on shadow banking. Since then, the credit cycle has accelerated and defaults have increased dramatically. Moreover, both investment grade and high yield borrowers have seen credit spreads over government debt escalate to the highest figures since November of 2019. Even though the Chinese government has responded with easier liquidity policies, the funding is not finding its way to smaller private companies, which accounted for more than 80% of the defaults in 2019.
A Peapack Private Wealth Management publication: INVESTMENT Outlook fourth quarter 2019
onto shareholders. Animal spirits joined with the Christmas spirit, as trade tensions lessened, global central banks
affirmed their accommodative ways, and economies around the world showed nascent signs of bottoming and
possibly turning up.
returns hovering around 10% for the three-month period. Bond and real estate equity returns were essentially flat
for the quarter, while commodities finally showed some life, up 5%.