Why Aren’t The Chinese Buying 5% Of Every Dow Jones Company? ~ MAKE MONEY BLOG$

3/10/11

Why Aren’t The Chinese Buying 5% Of Every Dow Jones Company?

10:03 PM

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Make Money Blog-The Chinese should be using their moneybags to buy positions in every major US company, the boss of a major mutual fund empire just told. It makes no sense that they are holding $1.160 trillion US government securities, he went on.

“Why” he asked me “don’t they wake up and buy equities, where they stand to make real money?”

A great probing question that probably can’t really be answered. ‘Cause I haven’t yet been able to interview Mr,. Zhou, the boss of the People’s Bank of China. I’ve been hankering to convince him to give me- an American reporter– his first big interview. And I’ll fight tooth and nail to try to get him on the cover. We should sell out that issue.

I told this fellow, wealthy in his own right, that I thought the Chinese weren’t ready to be that forthcoming, to take such an aggressive stance, and possibly stir up more political trouble with the US than they already have.

Maybe, if they let the yuan float and it appreciates the way I think it will, then it will be time.

Right now, they are still largely a consumer economy, and as such, are merely re-channeling the dollars they earn back into US government securities. It makes nice. It’s safe. It’s keeping the world financial system knit together.

I told my friend about the Chinese bigwig who comes to New York to meet for dinner regularly with a group of journalists, the NY Times, the FT, Newsweek, Bloomberg, Forbes– like that. It’s ALL off-the-record– and I can tell you some substantial portion of it is pure unadulterated propaganda.

So, here’s my guess. There will come a day when they will have less than 4.9% positions in P&G, MMM, Exxon, Wal-Mart, maybe even Apple, and don’t be shocked to see them suddenly turn up with 9% of Citigroup or Bank of America or GE.

And our trust funds will be into Baidu, China Mobil, Cnooc, PetroChina etc.

Until then, I’m quite content to have the Peoples Bank of China replace the Fed as buyer of first and last resort of Treasuries. Let’s hope they prove Bill Gross wrong for selling his lot.

Source: http://blogs.forbes.com