16 July 2019

Fed to begin tapering in March, UBS says

The United States Federal Reserve is likely to begin tapering its asset-buying program in March next year, a senior UBS A.G. executive said Thursday.

Pu Yonghao, UBS managing director and chief investment officer for Asia Pacific, said the global financial market has been expecting the move and is prepared to deal with it.

However, there are concerns in the US that the economy still needs help.

Pu said the gloomy job market, falling inflation and uncertainty surrounding the debt ceiling which is up for discussion by the US congress in February, show the US economy is stuck in a slow recovery.

Meanwhile, Pu expects China to set its gross domestic product (GDP) growth target at 7 percent for 2014, down from this year’s expectation of 7.7 percent growth, as the government presses forward with structural reform.

Credit expansion should be capped at the level of GDP growth to avoid overcapacity and a bloated economy, he said.

Key sectors such as consumption, healthcare, new energy, e-commerce, non-banking financial services and the environment have room for growth over the long term.

However, some traditional industries, especially heavy polluters, will be forced to close as the government leaves their fates to market forces.

He said that with China enjoying a trade surplus, the renminbi could further strengthen in the coming year, helping speed up reform.

A strong currency will help eliminate low-end industries, spur growth in high-end sectors and lower import costs, he said.

– Contact HKEJ at [email protected]



EJI Weekly Newsletter

Please click here to unsubscribe