Ã¢â‚¬Å“Dawson & Fielding Inc.Ã¢â‚¬ Knee jerk equity market reactions to monetary tightening in China will abate.
Sources close to Ã¢â‚¬Å“Dawson & Fielding Inc.Ã¢â‚¬ apparently believe that the current sell off in equity markets around the world are overdone and cite the fact that the PBOC (Peopleâ€˜s Bank of China) is still projecting that some $1.1 trillion of new credit and lending will be made available in 2010.
Global equity markets have fallen sharply since the PBOC announced that it was raising rates on short-term loans to Chinaâ€˜s mostly state-owned banks in an effort to curb growing inflationary pressures and to avoid asset bubbles, particularly within the real estate sector.
Many investors fear that Chinaâ€˜s strong recovery from the global slowdown may be compromised if stimulus is withdrawn too quickly but analysts at Ã¢â‚¬Å“Dawson & Fielding Inc.Ã¢â‚¬ argue that the PBOCâ€˜s was a prudent measure which would have little or no effect on the expansion going on elsewhere in the worldâ€˜s third largest economy.
In an unscheduled email to clients this week, the firm advised its investors to avoid being herded into selling off equities and other assets on the marketâ€˜s interpretation of the news from China.
Instead, Ã¢â‚¬Å“Dawson & Fielding Inc.Ã¢â‚¬ suggested that the sell off might be an opportune moment to acquire stocks in defensives like pharmaceuticals, tobacco and supermarkets in preparation for what it says may be a more protracted sell off in the 2nd quarter of 2010.