Ray Dalio, the founder of the world’s largest hedge fund, Bridgewater Associates, has made a resounding argument for investing in China, even as a trade war between Beijing and Washington appears to be escalating.
In a video posted online on Tuesday, a day after Sino-US trade tensions spread to the currency markets, Mr Dalio said that there remained a historic opportunity to buy into a country that is opening up its markets to foreign investors over the long term.
“Would you not have wanted to invested with the Dutch in the Dutch empire, would you have not wanted to invested in the Industrial Revolution and the British empire, would you have not wanted to invest with the United States?” he said. “I think it’s comparable. Would you have not wanted to have invested in those places?”
The billionaire hedge fund manager has been a China bull for decades and has repeatedly pointed to growth opportunities there. Bridgewater opened its first office outside of Connecticut in Beijing in 2011 to be closer to clients there, although it was not until more recently that the Chinese market opened up to allow foreign investors to launch onshore funds. Bridgewater launched an onshore fund investing in Chinese securities last year.
The appearance of the half-hour video online on Tuesday pointedly invited investors to look past the latest round of trade tension, which had rocked equity and bond markets around the world since US President Donald Trump announced tariffs on $300bn more of Chinese goods and Beijing allowed its currency to weaken against the dollar. Monday was the worst day for US equities this year.
Bridgewater is also planning to add a new section to its website later this week that will be devoted to its research on China and commentary on investing there.
“Yeah, I believe China is a competitor of the United States or Chinese businesses are competitors of American businesses or other business around the world,” Mr Dalio said, “and that therefore you want to be, if you’re diversified, having bets on both horses in the race.”
He said the two countries are unlikely to go to “classic war”, but added: “I think there’s a restructuring of the world order, in terms of changes in supply chains, who’s making what technologies.”
In the video, Mr Dalio dismissed the idea that investing in China now is too risky and said it is on par with investing in several more developed markets.
“I think Europe is very risky when monetary policy is almost out of gas and we have the political fragmentation and they’re not participating in the technology revolution,” he said.
“I think the United States is very risky in its own ways, having to do with the combination of the wealth gap, the political system, the conflict between socialism and capitalism that will be part of our election, the fragmented decision-making, so many different things and the absence of the effectiveness of monetary policy.”