China’s crackdown on foreign trade and domestic investment comparisons have led to a slowdown in many economic powers. Ray Dalio is not one of them.
Instead, the founder of the $ 140bn US hedge fund Bridge Bridgewater Associates and one of the country’s foreign exchange brokers, said he spoke directly to Chinese Communist Party officials last week, and was encouraged by what he heard.
“At the moment I am reassured that this does not mean that foreigners are outsiders,” said the 72-year-old, who went first to China 37 years ago. “We are in a place where it is frustrating for investors,” Dalio admitted. But “China’s experiments should not be interpreted as a return to Maoism,” he told the Financial Times.
Beijing’s experiments, which streamline video game training to education, have cost more than $ 1tn in market value from China since its mid-February peak.
Goldman Sachs estimates that another $ 3.2tn market capitalization could be reported with an uncertain future – almost the sixth in the Chinese stock market.
But Dalio says Beijing is looking for “common development” as Xi Jinping’s 14-year plan was before in March. It seeks to rectify a time when capitalism raised standards of living and also created “significant economic disparities” and “high debt”, he said.
This week, investors in a maritime deal offered by Evergrande goods producer heard the end of Beijing security. By Friday afternoon, they were still yet to receive the highest interest rate that fell the day before.
The world’s most indebted debt group is under pressure from government officials to deal with more debt. It has a 30-day period before failure to pay legally results in errors. Missed payments can start a major overhaul in China’s economic history, a region that controls one-third of the country’s economy.
Short seller Jim Chanos warned this week that Evergrande’s problems could be “too bad“For investors in China, there are more problems than the” Lehman-type “crisis because it marks the end of the country’s economic growth. China needs to find” new drivers, “he added,” or slow down gradually to a gradual growth. ” .
Some were extremists, arguing that Chinese government intervention is not uncommon and does not undermine long-term trends, such as those that arise among consumers.
Fred Hu, chairman and CEO of Primavera Capital Group, as well as China’s former president at Goldman Sachs, said: “It would be fraudulent and misleading to see that China cannot be used.” “In the same way, no one can say that Europe cannot be sold because of the euro’s debt and the banking crisis or Brexit, or the US border because of the company’s debt repayment.”
However, “it could be very useful,” Hu added, “if Chinese authorities could try to improve contact with investors and provide consistent and predictable ideas.”
Evergrande’s crisis and Beijing’s decline have flooded markets in recent months. But many foreign traders in China insist that their long tenure will help them deal with temporary jitters.
“Compared to the US, Europe and Japan, I think China is a young economy… Strong and unstable but its good years are ahead,” said Howard Marks, co-founder of Oaktree Capital Management.
“China is working to grow as a global financial player in line with their vision,” Marks added. “If they do things against the outside world, they will not do as they please.”
‘Why would you invest in China?’
The sudden and various robbery began last November when the first $ 37bn blockbuster to be donated to a Chinese group torpedoed eleven o’clock with the directors in Beijing. Later there were anti-monopoly measures and mass security against other major Chinese companies, including the ecommerce group Alibaba, hospitality and work platforms Meituan, and a hairdresser program Didi Chuxing – elections that were once popular with the global financial community.
As Xi seeks to change the culture and trade in the country as part of the “sustainable development”, Beijing has set stricter limits on what young people can do play video games. It also banned it benefit training section and they began to argue cosmetic surgery companies.
After scrapping the Ant IPO at the last minute, Ben Rogoff, director of London’s Polar Capital’s technology fund, cut his place in Alibaba and Tencent. “We have lost Chinese stocks in the past, but it is good because the political risks are higher than we think,” said Rogoff, whose currency is now much lower in China compared to its trademark.
“Technically there is a real downturn in our whole universe,” Rogoff added. “I can make a record with a growth of 20-25% without appearing in China.”
Hedge fund manager Kyle Bass stopped investing in China 12 years ago. Once you have learned about the national banks and practical ideas. “I thought it was a market I could never sell,” said founders of Hayman Capital Management in Dallas.
“The question for investors is why you can invest in China based on all the risks. There is no legal code, no obligation to give money to investors, and there is no fair amount for their companies. ”
“China is governed by law but not by law,” added Carson Block, a Texas-based retailer of Muddy Waters Research. “I’m not going to stay in China for long because the numbers are unreliable and there is no reliability in this regard.”
But others see Xi’s “common development” as an opportunity to achieve a level of alignment with the government’s goals in building a healthy and profitable economy.
With this in mind, Xi wants to revitalize the economy through human-driven growth, while eliminating inequality and supporting industries such as renewable energy, green manufacturing, medical aid, software, artificial intelligence and what drives the ‘Made in China’ story. The U.S. trade war has highlighted the need to improve domestic supply and reduce reliance on U.S. imports.
In any case, it helps to be in line with Beijing’s approach: “The study of monetary policy in China should be the right side of government policy,” said Justin Thomson, chief executive of T Rowe Price.
Additional reports of Leo Lewis in Tokyo