Keep a close eye on China slowdown

THE pullback in emerging market equities in the middle of last year was blamed squarely on the fear of the "tapering" of quantitative easing (QE) by the US Federal Reserve, which has since started. Tapering also came into play during the recent bout of turmoil in emerging markets last month.

But analysts also cited another influence this time: the slowdown in China's economy. This could persist - and some analysts think it could intensify. Some celebrated investors such as George Soros believe that developments in China will be the biggest risk for the global economy in 2014, eclipsing the eurozone debt crisis.

China's economic growth last year came in at 7.7 per cent. This is good by global standards, but not by China's; in fact, it was close to a 14-year low. Beijing acknowledges that growth will need to moderate as part of the rebalancing of China's economy (from investment- led growth to consumption-led growth), which is an official goal of the government.