World is not facing a 2008 crisis says Kelleher
Published 28/01/2016 | 02:30
China is doing "just fine" and what's happening in the global economy is not a repeat of 2008, the President of Morgan Stanley told a conference in Dublin.
China's highly volatile shares ended lower again yesterday, after plunging on Tuesday, taking losses so far this year to about 22pc or 12 trillion yuan.
The new year has seen a number of weak economic indicators from the world's second biggest economy, including data yesterday showing profits at Chinese industrial firms fell 4.7pc in December from a year earlier, the seventh straight monthly decline. The Chinese economy grew 6.9pc last year, the weakest in 25 years.
But at the European Financial Forum in Dublin, Irishman Colm Kelleher was upbeat on China.
"China's like marmite, you either like it or you don't. We are of the view that China is just fine. 6.9pc growth is OK, we believe those numbers broadly," he said.
"There's no new news here."
Sharing a platform with Tim O'Hara, Credit Suisse's chief executive of global markets, Mr Kelleher claimed the markets were undergoing a correction, and he dismissed suggestions from the likes of billionaire investor George Soros that the world faced a repeat of 2008.
"This is not 2008. There is no systemic risk, there's no smoking gun," he added.
It was a view shared by the Irish ambassador to China, Paul Kavanagh, who decried the "constantly negative" headlines on China and highlighted the opportunities for Ireland. Speaking from the floor of the conference in Dublin Castle, Mr Kavanagh complained of the "lack of balance" in the coverage of the sprawling Asian economy.
"A lot of people are reading these headlines and can become discouraged whereas in fact a rebalancing Chinese economy and a burgeoning middle class will continue to need all of the things that Ireland does best," Mr Kavanagh said.
"Food, top quality education, a platform for investment in the only English language country in the Eurozone. Ireland is a perfect market for China and they will continue to need, want and be able to pay for everything that Ireland does best. I would encourage people in Ireland who are reading these headlines not be blown aside by the ambient constantly negative headlines. Keep your eye on the ball and see the opportunities that are there for Ireland in particular."
Mr Kelleher, who was this month announced as President of the US investment banking giant, said Ireland had been "far sighted and brave" in its attitude towards bondholders in 2011. He said one has to follow the rules of capital markets.
"Ireland did the right thing. Some other countries didn't. Ireland is now one of the richest issuing countries in the west," Mr Kelleher said.
His comments came in the wake of a report from the EU's Court of Auditors, which stated that the European Central Bank's refusal to let Ireland burn senior bondholders was not explained to authorities in Brussels.