The panda in the room

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War in Ukraine, the pandemic and the recovery from it, rampant inflation and the end of the era of cheap money — people in the capital markets have a lot to think about when allocating or raising money. But are they missing the biggest problem of all: China’s slowing economy? 

A growing number of market participants think so. China as a producer of goods sold to the world and a key consumer of plenty of the world’s commodities and finished goods, is an integral part of the global economy and therefore, a driver of what is possible in the capital markets. Hopes of a revival in European stock market listings are now foundering as investors look long and hard at which companies are the most reliant on a Chinese economy dogged by lockdowns and port and factory closures.

We discuss who will be hit and how hard. We also look into how problems in other emerging market countries may effect their ability to raise funding in the bond market and where else they might go for cash instead.

We also take a look at some new bonds that were priced this week in different parts of the market and figure out what they tell us about how borrowers will have to approach a volatile bond market in the weeks and months to come.