Hedge fund size Ray Dalio is convinced: The second largest economy in the world is an attractive investment destination – if you consider a few things.
?? Many investors have withdrawn their money from China
?? Dalio sees further investment opportunities
?? It’s all about balance
Billionaire Ray Dalio continues to think the Chinese market is a potentially good investment. In an interview with CNBC, the expert explains what strategy he is pursuing in the region with his billion-dollar hedge fund Bridgewater Associates.
Diversity is paramount
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Many investors would have reduced their exposure to China in 2020 and withdrew funds from the region. In an interview with “Street Signs Asia”, Dalio said that “almost everyone in China is underweight”. However, he himself was convinced that it was a matter of “finding the right kind of balance” that could bring China investments to a profitable result.
“Our approach is – we call it the all-weather approach – to achieve a certain equilibrium where you can find balance without lowering the expected return. From that point you take tactical steps,” continues Dalio. However, these tactical steps would have to be adjusted over time.
Dollar weakness will help yuan outside of China
The Chinese Yuan the expert believes that it will be used more intensively, especially outside of China, given that the US dollar and other important reserve currencies are affected by weak economic development. China’s interest rates are attractive and the development of the capital markets has helped to strengthen the exchange rate for the yuan.
“You become more of the internalization of [Yuan] see, and that is a natural consequence, because as the dollar and the major reserve currencies struggle with the challenges mentioned, there will be an element of emptiness, “continued Dalio.
India has some catching up to do
In addition to China, Dalio also sees greater potential in another Asian country: India. However, there is still some catching up to do with the development of the capital market, which makes it more difficult to invest there, although there are investment opportunities in the country with regard to cutting-edge technologies.
“If the capital markets were much stronger, there was more liquidity and more opening of those markets would revive entrepreneurship,” he said, adding, “being able to make money that way and circulate it more efficiently would revive the Indian economy “.
Finanzen.net editorial team