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INVESTMENT OUTLOOKGiven that China is a key trading partner and market for many countries, thiscredit squeeze will not only dampen China’s growth but adversely affect theglobal economy. Investors concerned with this impact sent global stock pricestumbling in June, especially in Asia.While seen as the worst liquidity squeeze in a decade, it is deemed as anecessity by the Chinese government to avoid a repeat of the banking crisisthat happened in 2008 in the US. By clamping down on credit, China is preparedto embrace slower growth in exchange for more sustainable expansion. Chinais targeting 7% 1 annual growth over the next decade as opposed to more than10% annual growth that was registered in previous years. Over the longer term,a more sustainable growth rate without the ill effects of a frenetic pace will bebenefi cial to China’s economic health.Japan – World’s Third Largest EconomyIn a bid to revive his country’s stagnant economy, Prime Minister Abe has putin place a series of aggressive economic policies to spur economic and wagegrowth.After a decade of stagnation, Japan’s economy is showing some signs of life.Recent mid year data signals an improvement in economic activity. Factoryoutput grew the most since 2011 2 and retail sales climbed. The economy mayhave been stirred up by “Abenomics” – Prime Minister Abe’s policy of monetaryeasing and big fi scal spending plus economic reforms.On the investment front, the Japanese stock market rose sharply this year butstumbled in June. The fall was in part due to some scepticism about Abenomicsas well as some head-winds from China and US.It will become more evident in the coming months whether Abenomics is theright medicine for Japan. The current increasing levels of consumer spendingand factory activity bode well for Japan’s longer term recovery.Investment Outlook3