Vanguard Group Inc is an American investment management company based in Malvern, Pennsylvania; it is also considered as the world's biggest mutual-fund company. According to Bloomberg, this company believes that instead of looking into the stock market, investors in search for an indicator of the Chinese economic growth should look into the property market.
"Real estate is the risk, not stocks," Joseph Davis, the investment firm's chief economist, reportedly said during his appearance at the Morningstar conference on exchange-traded funds in Chicago on Tuesday. "While it isn't a high probability, a housing crash reminiscent of the one that began in the U.S. in 2007 could generate a recession," he added.
Furthermore, according to Bloomberg, the economic progress in China has dwindled as the country switches from an industrial-driven economy to one that is determined by consumers. That has led venture capitalist nervous, both at home and abroad, fueling unpredictability that resulted to a global market selloff on August 24, 2015. And basing on what Davis has said, housing may, on the other hand, should be seen as a better gauge of tension within the economy in China; 80 percent of the country's economic slowdown over the last period of six years can be pinpointed to slackening investment in real estate.
Moreover, as how Davis puts it, the Slowing growth for the economy that is considered the second-largest in the world does not mean something negative right away, especially in cases where policy creators lead the shift. The devaluation of the Chinese currency, the Yuan, last month was "mistimed," "while attempts to prop up the stock market by buying equities were ill-advised".
"The rapidity of the change has caught Chinese policy makers off guard, but ultimately that rebalancing is unquestionably positive," Bloomberg quotes what Joseph Davis said.