Five Facts Every Investor in China Should Know

By Jerry Robinson | Followthemoney.com

Federal Reserve Confusion… Last week offered much in the way of understanding how things may be beginning to unfold at the Federal Reserve. After the August 10 Fed Board meeting where tensions reportedly flared among members over when to begin a new round of quantitative easing, came the Fed’s annual retreat to Jackson Hole where Bernanke undoubtedly revealed the Fed’s stance as a deflation fighter. You can read his entire speech here.

Five Facts That Every Investor in China Should Know… Money manager Puru Saxena joined me on the podcast last weekend from his office in Hong Kong to talk about why he is more bullish than ever on investing in China. He talks about the specific areas and sectors in China where he and his clients are investing. Listen to the two-part interview below.

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Puru Saxena Interview – Part 1

Puru Saxena Interview – Part 2

Tail-spinning USD… In other news, China’s drive to provide its currency with international reserve status got a boost last week. Many of the world’s biggest banks – including JP Morgan and Citibank – have launched international roadshows promoting the use of the renminbi (the Chinese currency) instead of the U.S. Dollar to their corporate customers engaging in trade deals with China.

Citibank also made news last week when a foreign exchange report was released a warning that another round of quantitative easing from the Federal Reserve was the “endgame” for the U.S. Dollar. Here’s a brief excerpt from the Citibank report:

A second round of QE will likely put sharp downward pressure on the USD, to some degree versus the euro
and other G10 currencies, with the potential for a broader USD sell-off. Foreign investors are likely to view the renewed direct intervention as indicating that the Fed’s balance sheet expansion and implicit monetization of fiscal expenditures are first line approaches to dealing with disappointing recovery prospects, rather than the exceptional measures they were meant to be initially. This could have severe implications for foreign perceptions of the quality of the US assets that they are accumulating in private and official portfolios, and may lead them to draw the conclusion that USD weakness is less a by-product than a desired outcome of these measures.

About Jerry Robinson

Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, Followthemoney.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, a podcast dedicated to simply explaining our complex financial world.

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