Equities remain a good investment despite a slower Chinese economy and ongoing concerns in Europe, John Haynes, Head of Research at Investec Wealth and Investment told CNBC.
“I’m a huge long term bull on equities, I think we’re starting from a great place and if you have the patience of an investor, rather than a trader which is anything less than 12 months, I think it’s a great place to be,” Haynes said.
“But one has to recognize that there’s thin ice on the euro zone situation at the moment,” he added.
Haynes conceded that “the summer looks to be a little tricky”, particularly with regard to China where a leadership change will take place later this year.
Haynes pointed to the recent removal of Bo Xilai, the Communist party chief in the city of Chongqing. Bo Xilai, widely tipped to be promoted to the nine-man politburo after the administration change, was removed from his post following a scandal in Chongqing.
“The political situation in China is becoming interesting and more interesting that we thought it might do and Bo Xilai’s removal is actually quite a new twist in the game,” Haynes explained.
“We thought it would be smooth and pain free, but the fact that you have people who are waving red flags and actually taking a step back in terms of their political thought process means that maybe we’ll have little bit less good news coming through from that source for a little bit,” he added.
Haynes explained that the removal of Bo Xilai, a prominent supporter of Mao’s cultural policies, did not necessarily represent a win for the reformers in China, but the attention it has received outside of China gives some indication of how important China has become.
“China is becoming a lot more important and any change in the political temperature there therefore is much more important to how the West perceives its own prospects,” Haynes stressed.
“I don’t see revolution being down the corridor, but clearly we don’t know how this plays out, so it would be very unwise to bank any gains and say everything is fine,” he warned.