China has “no safe places to invest”, says Bridgewater

Turmoil in the Chinese stock market means China is no longer a safe place to invest, says Bridgewater hedge fund

 
Beijing, China. Bridgewater Associates has expressed scepticism about investment opportunities in the country
Beijing, China. Bridgewater Associates has expressed scepticism about investment opportunities in the country 
Author: Tom Bailey
July 24, 2015

The “world’s largest macro hedge fund” Bridgewater Associates has expressed scepticism about the future of the Chinese economy. Talking to clients, the hedge fund’s founder Raymond Dalio said, “our views about China have changed”, reports the Wall Street Journal. “There are now no safe places to invest.”

Since June 2015, the Chinese stock market has tumbled

Dalio says that the recent stock market meltdown in China will negatively affect the country’s economic growth. Since June 2015, the Chinese stock market has tumbled. After reaching a high point in June, prices dropped off by almost a third, resulting in $3trn being wiped from the market.

The impact of this will be long lasting and widespread, says Dalio: “Even those who haven’t lost money in stocks will be affected psychologically by events, and those effects will have a depressive effect on economic activity.”

Despite the authorities stepping in and the worst of crash having passed, many foreign investors are choosing to pull out of China, as shown by “the latest ANZ/EPRF flow of funds report…for the past week to July 22,” Business Insider reports.

Further bad news for the world’s second largest economy also comes from the Caixin Flash China General Manufacturing Purchasing Managers Index. The index, an “indicator of manufacturing sector operating conditions in China,” showed that there was a larger contraction in China’s factory sector in July than there had been for the past 15 months due to a fall in orders and output. These figures cast doubt on official Chinese statistics, which put GDP growth at seven percent and have already been questioned for their accuracy.