FAST PODCAST: How the China slowdown is affecting Aussie investors | Pendal Group
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FAST PODCAST: How the China slowdown is affecting Aussie investors

Growth in China has been slowing amid headlines of widespread Covid lockdowns. In this fast podcast Pendal’s AMY XIE PATRICK explains what it means for Aussie investors

You can also listen to this podcast on Apple or Spotify
An excerpt from this podcast

Amy Xie Patrick, Pendal’s head of income strategies:

Some leading indicators for China’s growth are back at levels last seen at the start of the pandemic.

The recovery path is uncertain as long as Beijing sticks to its zero-Covid policy.

What does that mean for the global economy – and specifically for fixed income investing?

“This kind of growth slowdown in China will ultimately impact the rest of the world,” says Pendal’s head of income strategies, Amy Xie Patrick.

“The reason we’ve all been sheltered so far is because our comeback from Covid – thanks to a lot of fiscal stimulus around the world — has helped buffer some of these headwinds coming out of China.

“But the other side of the picture, at least in the short term, is these lockdown measures are leading once again to bottlenecks in supply chains and logistics.

“Unfortunately for the time being, global inflationary pressures will grow as long as Chinese lockdowns continue to intensify.

“Those opposing forces mean different things for fixed income.

“Slowing growth should mean that bonds have their heyday again.

“But in the near term it’s difficult to say this is the turning point in bond yields, because inflation is still a worry.

“If the growth situation in China gets materially worse – which isn’t our base case –fixed income portfolios that look a lot like equities portfolios with a lot of credit and high yield in them will fare poorly.

“But if you are concerned about the growth picture – and you are willing to once again dip your toe into more pure fixed income portfolios that rely much more heavily on that duration lever – those portfolios will be more reliable at delivering a defensive performance profile if the worst scenario eventuates out of China.”


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About Amy Xie Patrick and Pendal’s Income and Fixed Interest team

Amy is Pendal’s Head of Income Strategies. She has extensive experience and expertise in emerging markets, global high yield and investment grade credit and holds an honours degree in economics from Cambridge University.

Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia. Pendal won the 2023 Sustainable and Responsible Investments (Income) category in the Zenith awards. In 2021 the team won Lonsec’s Active Fixed Income Fund of the Year Award.

The team oversees some $20 billion invested across income, composite, pure alpha, global and Australian government strategies.

Find out more about Pendal’s fixed interest strategies here

About Pendal Group

Pendal is a global investment management business focused on delivering superior investment returns for our clients through active management.

Contact a Pendal key account manager here


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