Hedge fund billionaire Ray Dalio says benefits of investing in China outweigh risks

Ray Dalio, the billionaire founder of the world's largest hedge fund Bridgewater Associates, said investing in China is a good idea despite the risks, because Chinese assets are cheap and can help balance portfolios.

"Diversification and investment in China is desirable," Dalio said in a virtual presentation at the Greenwich Economic Forum in Hong Kong on Wednesday. "Chinese assets are very attractively priced."

There are concerns among international investors about potentially being penalised by their governments for investing in the country, with anti-China policies set to gain bipartisan support in the US election this year, he said. Meanwhile, China's own economic problems, including its protracted real estate crisis, debt issues and the knock-on effects of those, are also making investors anxious.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

However, none of these risks outweigh the potential benefits of investing in the world's second largest economy in Dalio's view.

"There are certainly effective ways to make investments in China" despite the challenges, and Bridgewater has "done very well" over the last five years operating there, he said.

The long-term China bull's latest remarks follow his endorsement of the country's battered markets earlier this year.

"The time to buy is when everyone hates the market and it's cheap, which is now the case in Chinese equities," Dalio wrote on his LinkedIn blog in April.

Since then, the country's markets have staged a powerful rebound. The Hang Seng Index has climbed as much as 31 per cent from a January low, while the CSI 300 Index that tracks stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange has rallied over 10 per cent in the same period as optimism at home grows.

Fuelling the rally, the Chinese government has stepped up efforts to stimulate the economy, which has struggled against a tide of local government debt and geopolitical tensions as well as the moribund property market.

Beijing launched a US$41 billion housing rescue package last month to halt the real estate downturn, and home sales are showing early signs of recovery as the stimulus filters through. More economic support measures are expected to emerge from next month's key policy meeting as leaders try to bolster growth.

Foreign investors are regaining their appetite for Chinese as they become less pessimistic about the prospects of economic recovery. Offshore funds bought 8.8 billion yuan (US$1.2 billion) of yuan-denominated stocks in May, bringing the net buy this year to US$11.5 billion, according to Stock Connect data.

Veteran emerging market investors like Mark Mobius have also turned bullish on Chinese markets given the attractive valuations on offer.

"The Chinese market has reached the bottom and is beginning to deliver the recovery after all the government measures to support the real estate market. We have seen light at the end of the tunnel," Mobius said last week.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.