- The Chinese Are Selling Treasuries – So What Are They Buying?
- Europe-China Connection Could Rattle Stocks
- How to Profit From China's Next Move
- What China's Investment Trends Are Telling Us Now
- China Tells Banks to Curb Lending After a Generous January Start
- Never "Short" a Country That Has $2 Trillion in Cash
- China's Emergence is the Decade's Most-Read Story
- 7 Reasons China Will Lead the Global Economic Recovery
- Greenback Woes Boost China's Global Muscle
- Three Ways to Connect With China's Profit Pathway
The battle between China and Japan for the title of largest holder of this dubious asset is not very interesting. What's more interesting is the question of where China is instead opting to invest. After all, $34.2 billion is a fair chunk of change, and China's overall reserves are growing - not shrinking - and now total $2.4 trillion.
The People's Bank of China usually keeps its holdings a carefully guarded secret, much more so than for most central banks - our knowledge of its holdings of Treasuries comes from U.S. data, not from China. We do, however, have some evidence about the Chinese government's investment thinking, thanks to the holdings of China Investment Corp., the country's $200 billion sovereign wealth fund.
To discover the details of China’s global investments, please read on...
The Shanghai stock market ended a fraction higher, so it was a bit anticlimactic. But the key thing to know is that the Chinese market still appears to be in a downtrend and that bodes ill for the rest of the emerging markets. The 50-day moving average of iShares FTSE/Xinhua China 25 Index (NYSE: FXI) has turned emphatically negative, as has the slightly longer 100-day average. The index fund also is already beneath its 200-day average, which tends to distinguish bull cycles from bear cycles.
But a handy little tool called a "Form 13F" can help.
In case you're not familiar with it, the 13F is a disclosure document that the U.S. Securities and Exchange Commission (SEC) requires institutional-investment managers to file when they hold $100 million or more of certain U.S.-listed stocks.
China's $300 billion sovereign wealth fund (SWF) - the China Investment Corp. (CIC) - just filed its first-ever 13F with the SEC, revealing that it purchased about $9.6 billion worth of U.S. stocks last year.
And it confirms much of what we've been telling you since the global financial crisis began - namely that China would take advantage of the crisis by purchasing beaten-down stocks, resources, and hard assets ... and in a big way.
Even more important, this filing hints at what China is likely to do next - an insight that will help investors figure out where to put their money in order to maximize their personal profits.
But there's now a potential new "leader of the pack" whose moves investors need to watch and even emulate.
We're talking about China.
Overall credit growth in China will be capped at $1.1 trillion (7.5 trillion yuan) for 2010, Liu Mingkang, chairman of the China Banking Regulatory Commission, told Bloomberg News in an interview in Hong Kong. Some banks were asked to limit credit because they failed to meet standards for capital reserves and other regulatory requirements, Liu said.
New loans in the first 10 days of this year were "relatively high," he told the Asian Financial Forum.
That may be understating the situation.
Never short a country with $2.3 trillion in currency reserves.
I'm well aware that bond king Bill Gross has been sounding the alarm about a China bubble, and that Forbes magazine is predicting a major meltdown by the Asian giant. I've also heard all about noted short-seller James S. Chanos - who made his name by correctly calling the Enron Corp. demise - who recently described China as "Dubai times 1,000 - or worse."
Just yesterday (Wednesday), in fact, U.S. stocks suffered their worst beating of the New Year on fears that new bank lending curbs in China might blunt the worldwide economic rebound. Asian markets also were down yesterday.
So what's really going on here? China is making its banks tighten credit. Some of the biggest banks, I've heard, have actually suspended loans for the rest of January! Many analysts and media pundits believe this is the beginning of the end of the Great China Growth Story.
Don't believe it.
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China's emergence as a global economic superpower was the most-read news story of the past decade, surpassing such events as the Iraq War and the 9/11 terrorist attacks, concludes The Global Language Monitor LLC, a U.S. media tracking group.
There's a strong-and-growing interest in the Asian heavyweight, now the world's No. 3 overall economy, said Global Language President Paul JJ Payack.
"The rise of China to new economic heights has changed - and continues to challenge - current international order," Payack said. "It is with little surprise that its ongoing transformation has topped all other news stories in a decade [that's been marked] by war, economic catastrophe, and natural disasters."