[Marxism] Might explain Wen's Worries

S. Artesian sartesian at earthlink.net
Mon Mar 16 09:20:27 MDT 2009


Financial Times,  March 16

China Loses Billions on Equities Bets Ahead of Markets' Collapse

China has lost tens of billions of dollars of its foreign exchange reserves 
through poorly timed diversification into global equities just before the 
world markets collapsed last year.

The State Administration of Foreign Exchange.... started making huge bets on 
global stocks early in 2007 and continued this strategy at least until the 
collapse of the US mortgage finance providers Freddie Mace and Fannie Mae in 
July 2008, according to analysts and people familiar with SAFE's operations.

By that point SAFE had moved well over 15 percent of the country's $1800bn 
reserves into riskier assets, including equities and corporate bonds, 
according to people familiar with its strategy,

SAFE never discloses its holdings except to the top Chinese leadership, so 
it is impossible to know exactly how much it has lost from diversifying 
before markets crashed....

Total holdings of US equities by all Chinese entities reached $100bn by the 
end of June last year, more than triple the total Chinese holding in June 
2007, according to an annual survey published by the US Treasury...

The bulk of SAFE's holding remain in US Treasury bills....
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Ahh... the bigger fool theory at work. 





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