A word of warning on China's future

Credit expansion is 'noteworthy'

Markets have remained very strong rolling into the New Year and, based on a straw poll of the market, the performance is likely to continue through the next few months.

If anything, despite having had a decade-long bull market in the US, we are finally getting to the stage where we have some exuberance. Year of the Rat: A new dawn for China? While all looks rosy, and we ourselves are not pessimistic in the short term on emerging markets, a word of warning for the year or years ahead: we have now had ten years' worth of rising markets in the US and 16 years' worth of uninterrupted credit expansion in China.  The credit expansion in China is particularly noteworthy. We have reached the point where certain unrealistic and unreasonable assumptions are...