Emerging market investors shrug off China's debt problem

Record high debt-to-GDP ratio no issue for bullish managers

China's debt-to-GDP ratio is at its highest ever level at almost 50% while its Q1 2019 economic growth slumped to multi-year lows at 6.4%, according to data from Trading Economics and the Bank for International Settlements, but many investment professionals warn against preparing for a hard landing or a banking crisis.

The issue has been thrust into the spotlight recently ahead of the inclusion of onshore Chinese renminbi-denominated government debt within the Bloomberg Barclays Global Aggregate index, of which it will represent around 5%, thereby increasing developed market investors' direct exposure to the country's debt markets. Why the US-China power dynamic will shape the investment landscape for decades Investors have been concerned about China for some time, following a collapse in the global demand for goods - including exports from China - during the throes of the 2008 Global Financial Cris...