Bridgewater Associates founder Ray Dalio stated that a small portion of his family office's portfolio remains invested in China, even as he acknowledges the "real issues" facing the country amid a deepening economic slowdown.
"You have an environment in China which is changing and becoming a more difficult environment," Dalio said in an interview with Bloomberg Television on Wednesday. He highlighted that the world's second-largest economy has evolved significantly over the last four years, with both its property and equity markets in decline, leading many Chinese to hold onto cash.
China's industrial output posted its longest slowing streak since 2021 in August, with consumption and investment weakening more than expected. This economic downturn is putting pressure on Chinese authorities to swiftly implement fiscal and monetary stimulus measures to meet this year’s growth target of around 5%.
Despite the challenges, Dalio noted that China remains a "very attractively priced place" to invest, although the critical factors are the size of the investment and its structure. "There’s a small percentage of our portfolio which is in China and we’ll stay in China through this process," he said on the sidelines of the Milken Institute Asia Summit 2024.
However, Dalio also suggested that China requires a restructuring, particularly due to challenges stemming from its property sector, which he said has placed it in "a situation that's more challenging than Japan in 1990."
China's current economic weakness presents a significant test for President Xi Jinping as he attempts to balance growth with avoiding substantial stimulus measures that have previously led to boom-and-bust cycles.
Dalio emphasized that investors should be cautious and recognize that all countries experience economic cycles. He advised, "In no country should you invest so much money that it becomes a dominant portion of your portfolio."
Comments
Post a Comment