Blue skies witnessed during a recent trip to Shanghai concerned Sam Le Cornu, head of Asian listed equities at Macquarie Investment Management.

Speaking at Craggy Range's fourth annual speaker series lunch in Havelock North yesterday, the Australian told the audience of 245 that when he left the plane "I looked up at the sky and got very nervous", he said.

Blue skies meant the Chinese "two-speed" economy was slowing down after 15 to 20 years of investment. He said central government and households had a lot of money, but local governments did not. Local government had invested borrowed money and enjoyed a 7 to 8 per cent return on equity, which was no longer possible, but he doubted a "hard landing" was due for China.

A "massive" crackdown on corruption was very effective, meaning general spending boosted the economy more directly.


He predicted visitor numbers from China to soar. Currently, 4 per cent of Chinese had a passport, expected to grow to 20 per cent by 2025.

Many sought to invest overseas and his company sought to buy assets benefiting from Chinese outreach "before the Chinese do".

While the theme of the lunch was "Which is the lucky country?", the Australian avoided saying if Australia was luckier than New Zealand.

The second speaker was more parochial.

New Zealand Super Fund chief investment officer Matt Whineray was born in Australia but moved to New Zealand aged two.

"My first words were, 'I renounce my citizenship,'" he said.

He said a clever country would always fare far better than a lucky country, because luck was fleeting.

Luck was unreliable - United States lottery winners went bankrupt at the same rate "as the rest of us".

Countries were the same.

He said many countries had enjoyed natural resource discoveries, only to find when the resource was depleted their exchange rate had "gone through the roof" and their economy was uncompetitive.

"When it's all done, they are worse off than when they started," he said.