Bridgewater Associates examines why China’s pandemic recovery and market behavior diverged sharply from developed economies, making geographic diversification increasingly relevant. China returned near 2019 activity levels while retaining monetary flexibility, and its historically low correlations with developed markets may offer investors a different economic exposure.
China’s Differentiated Economic and Market Outcomes and the Need for Geographic Diversification
Bridgewater
Kate Dunbar, Jason Rotenberg
Article
1 Pages
Key Takeaways
Different Economic Cycle: China’s activity returned near 2019 levels while many developed economies remained weaker, leaving policymakers with roughly 3% government bond yields and additional monetary flexibility.
Diversification Stands Out: Chinese equities had a 35% historical correlation with developed world equities, versus 89% for both US and European equities.
Uneven Domestic Recovery China’s production led the rebound while consumption lagged, with catering, a contact intensive category representing 10% of retail sales, recovering more slowly.
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