Argonaut's Bennett: China slump was no surprise

Export economy has lost competitiveness

Argonaut's Greg Bennett, co-manager of the Argonaut Absolute Return Fund alongside Barry Norris, explains to Investment Week why he is short several sectors in China and how he protected the portfolio during August's volatility.

How concerned should investors really be about China after the recent stockmarket sell-off? We think China's currency devaluations are a tacit admittance that its export economy has lost competitiveness. Chinese headline growth numbers continue to be overly-dependent on fixed asset expenditure stimulus which itself is well past the stage whereby there are significant multiplier effects for the wider economy. There is over-capacity in a wide range of Chinese industries, including housing, which will require either a cleansing of the system through bankruptcies, or more stimulus which w...