China’s stock markets are likely to remain in an adjustment phase through the first half of next year following the previous monster rally, according to the chief executive of UBS AG.
The country should take more steps to diversify its capital market and prevent it from depending too much on a single asset class, Sergio Ermotti said.
Ermotti, however, defended Beijing’s July intervention in the stock market, saying a balance should be struck between liberalization of the market and the social and economic impact of such opening up, the Hong Kong Economic Journal reported.
On the foreign exchange regime, Ermotti said he expects free floatation of the renminbi to be the ultimate goal of the government.
China devalued its currency in sudden moves last month, sending ripples through global financial markets.
Ermotti said in an interview that he expects better-quality growth in the Chinese economy although the overall pace may moderate to the 5 to 7 percent range, which is still robust.
In other comments, the UBS chief said that if the United States’ fed funds rate is kept unchanged through the end of this year, it may be taken as a strong signal that the central bank is worried that economic woes of China and some other countries are far more severe than originally anticipated.
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