The China data continues to look fairly ordinary. GDP came in well below expectations (0.2%, vs 0.4% expected)…


and fixed asset investment continues to moderate. This belies the almost certainly awful data for late August and September, which is when the fallout from Evergrande began to really heat up.


The retail sales growth rate continues to bend right before your very eyes, with the run-rate/growth trajectory notably below that of say 2015.

Households just do not have a large enough share of income to enable China to persist with the present growth strategy (housing that no-one can afford, that accordingly sits vacant, even as new supply is added through overinvestment to residential and commercial property).


Implications are the same as they have been for years. A crash is unlikely, given the power and wealth of the state, but property demand and the associated raw material inputs…


…will decline. In turn, there’s comparatively little investment implications for us. We are UW emerging market equity exposures, and have no emerging market debt exposures.

We are materially underweight iron ore, in our direct Australian share exposures, and although we’ve got BHP in the portfolio, it is more a case of managing the underweight, and recognising that post a fall from c$230/tn down to $120/tn, we wished to make some modest additional allocation to the sector.

We remain quite happy holding Alumina (the headstock), which we bought when it was deeply out of favour, largely due to the attractive yield despite bottom of the cycle pricing for alumina (the commodity) given the favourable cost curve positioning and net cash balance sheet.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.