Why China is squaring up to shadow banks

ON ASIA

China's struggles with its burgeoning shadow banking sector are the main threat to global equities, explains Cornelian's Hector Kilpatrick as he gives an update on his private client portfolios.

Developed market equities are likely to do well this year given the underlying strength of the US economy. However, this is provided the Chinese are successful in reining in their shadow banking sector without causing a dislocation in the growth prospects of emerging markets. China troubles There are a variety of difficulties which the Chinese authorities are now, at last, confronting. Firstly, the Chinese authorities are beginning to rein in moral hazard by allowing defaults to occur in both the shadow banking and corporate debt markets. To date, the defaults have been insignifica...