Bill Gross, who oversees the world’s biggest bond fund at Pacific Investment Management Co (PIMCO), said that the pace of economic growth in China is among the biggest questions in developing nations and the largest risks for markets.
“I call China the mystery meat of emerging-market countries,” Gross said on Tuesday during an interview on Bloomberg Television’s Market Makers with Erik Schatzker and Stephanie Ruhle. “Nobody knows what’s there and there’s a little bit of bologna, so we’re just going to have to wonder going forward through this year as to the potential problems in China and other emerging markets.”
Uncertainty about China’s growth this year is adding to investors’ unease and demand for the safest of assets, Gross said.
“The last wild-card, Erik, in terms of emerging-market space, obviously is China,” Gross said. “Is it 6 percent? Is it 7 percent? Is it 5 percent?”
China’s economy grew 7.7 percent last year, the same rate as in 2012. Expansion is forecast to be 7.4 percent this year, the weakest pace since 1990, based on the median estimate in a Bloomberg News survey.
PIMCO has been buying US Treasuries maturing in four to five years this week, sticking to the strategy outlined last year amid expectations the US Federal Reserve will hold short-term rates through the year even as it reduces asset purchases, Gross said.
“Emerging markets are getting cheaper,” he added. “The problem is emerging markets have problems. Take examples such as Brazil and Turkey. These are countries with widening current-account deficits. These are countries which, by necessity, in order to stabilize their currency, have to raise interest rates and put their economies at risk in terms of slower growth.”
The performance of the US$237 billion Total Return Fund over the past three years puts it ahead of 67 percent of similarly managed funds, gaining 4.7 percent over the period, according to data compiled by Bloomberg. It has returned 1.64 percent this year, placing it in the 55th percentile.
The proportion of US Treasuries and government-related debt in the fund was 45 percent in December last year, compared with 37 percent in the previous month, based on the latest data from the company’s Web site.
Gross held emerging-market bonds at 6 percent in the fund in December last year and raised non-US developed debt to 6 percent from 4 percent in November, the data show.
Eaton Corp chief executive officer Sandy Cutler said China’s economy is accelerating, buoyed by increases in consumer spending, bringing growth in line with the country’s public pronouncements.
China may have inflated the extent of its expansion by a factor of two in recent years, masking weakness as government infrastructure spending fell and individuals had not yet picked up the slack, Cutler said on Tuesday in a telephone interview. The rebound means that China’s indicators are closer to giving an accurate reading, he added.
Eaton sells products across consumer and industrial markets, including hydraulics for construction equipment, auto parts, lighting for homes and buildings and electrical goods. The Dublin-based company does business in China across all those segments.
Gross sees a global economy marked by slow growth.
This will persist “for a long, long time. Certainly in the US we saw some bad numbers over the past few days and we wonder whether or not that 3 percent growth rate in 2014 is for real,” he said.
PIMCO popularized the term “new normal” in 2009, which describes an era of lower returns, heightened government regulation, diminishing US clout in the world economy and a bigger role for developing nations.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained