China expected to normalise rates

Managers are expecting the Chinese government to continue to raise interest rates and begin to normalise monetary policy as the country looks to control rising inflationary pressures.

Following last month’s surprise rate rise, the first time in nearly three years, October inflation figures showed a jump from 3.6% to a two-year high of 4.4%, well above the government’s target of 3%. Talk of further imminent rate hikes spooked investors on Friday, with the Shanghai Composite Index plunging well more than 5%, its worst decline in over a year. Schroders’ head of global and international equities Virginie Maisonneuve said the trend for increasing inflationary pressure was continuing. “The recent increase in rates combined with the increase of the reserve requirement ...