More China news

[Olav23]

China has agreed to place USD $3 billion of its massive foreign exchange reserves with Blackstone, US-based private equity group, signalling Beijing is starting to switch investments from US treasuries into more risky equity holdings, Financial Times reported.

The decision suggests China is testing the water for a much bigger investment in private equity. It could open the floodgates to a tide of money flowing into the sector at the precise moment regulators are becoming concerned it may be overheating.

In unrelated, but also interesting China news:

Li Ka-shing, Asia's richest man, and central bank Chairman Zhou Xiaochuan have warned that a stock market bubble may be building. A more than doubling of the CSI 300 Index in the past six months has made Chinese stocks the world's most expensive, at 43 times reported earnings, according to Bloomberg data.

 

[Islandboy]

Does this mean Blackstone is to invest the money in the US stock market ? If there is a US market bubble, this time we will blame the hedge funds, private equity, China, Icahn, Buffet and others value investors like him such as Eddie Lampert. I do not hear the co-workers and friends talking about the stock market as they did in 2000.

 

[Olav23]

Well, with the stock market, anyone can participate. In the private equity world, just "accredited investors" get to play, and you'd have to hang around the perrier cooler instead of the water cooler

 

[kumquat]

US 3 billion? That's roundoff error when you consider the exchange rate between the yuan vs US$. I doubt that the Chinese government will let the yuan float for a long time.

 

[Olav23]

That seems to be just the tip of the iceberg to "feel things out". Other articles have reported that this is its first operation of what will ultimately be a new government agency.

State media have reported that the new agency could manage up to $200 billion, although some Chinese economists have called for twice that amount to be at its disposal.

 

[MikeD]

Haw! The name Ka-Shing sounds like cash register noises!

Mike D.