Are Wilmar's China concerns overblown?

There’s a bright spot behind China’s slowdown.

In the wake of a short seller attack that saw its share price plummet to a six-year low, Asia's leading agribusiness group is staring at another possible roadblock as China, where a big chunk of its earnings come from, faces more economic turbulence.

According to analysts from OCBC, despite the sluggish nature of the Chinese economy, economists are still optimistic for economic growth on the expectation that the central government would issue more priming measures.

"No doubt China’s economy has recently hit some rough spots - in Aug for example, industrial production rose 6.1% YoY versus Bloomberg’s 6.5% consensus growth; fixed asset investment rose 10.9%, versus street’s 11.2% consensus, and was also the slowest pace in 15 years; only retail sales met expectations, growing 10.8%," OCBC said.

However, OCBC says Wilmar's China woes may be an overreaction, as economist believe the slower pace of growth projected in 2016 and 2017 is in line with the country's switch from an industrial-driven company to a service-driven one.

"In fact, the China Beige Book international recently noted that global investors have adopted an excessively negative view of China’s prospects, adding these investors have a history of over-reacting to problems in China," OCBC added.

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