China to Invest $3 Billion in Blackstone

Oh my. . .


AP
China to Invest $3 Billion in Blackstone
Sunday May 20, 6:02 pm ET
By Joe Bel Bruno, AP Business Writer
China Agrees to Acquire $3 Billion Stake in Private Equity Firm Blackstone


NEW YORK (AP) -- China has agreed to acquire a $3 billion stake in U.S. private-equity firm Blackstone Group LP in a deal that marks that country's long-anticipated move to expand how it invests its massive foreign exchange reserve.

http://yahoo.reuters.com/news/artic...5-20_18-57-15_N20267830&type=comktNews&rpc=44

 

Yes, what a surprise.

Now I wonder if most people realise the significance of this?

Nah, they're busy discussing Cramer.

'Welcome to the machine.'

 

what's your take on it?

 

So when Blackstone LBOs some other companies, China can feel like they own some of it. Their money is at work.

In the large scope of things, I think this is actually positive news.

 

Government ownership of business is good? It doesn't sound very good to my ears, except for a little short term boost for equities.

 

Yeah, it was rumored for two weeks. Sovereigns buy stock all the time.

 

My thoughts on the matter:

- China obviously divesting US Treas. and seeking alpha. Bond yields will move up over time with the Chinese bids dissipating - might break the mortgage camel's back imo; US stocks may benefit short term as they pour money into different assets but longer term, non-US equities will be bigger winners. YMB, gradually strengthening over time, will be good for their economic strengths and purchasing power but over here, as we don't really have viable alternatives to cheap Chinese goods until they get significantly pricier, it may potentially have an adverse effect on inflation as well as consumer confidence.

All in all, looking only at this, bonds will suck, housing just might capitulate, equities will benefit short term but underperform the world market longer term and economic fundamentals may deteriorate, while the Fed may not be able to cut rates due to above mentioned reasons.

 

It's not government ownership, it's private equity. Chinese government is simply an investor in that equity fund. They may have some input but Blackstone is who really owns & manages the assets.

It's positive because those huge piles of USDs are being put to work. Rather than dumped and exchanged for a different currency.

 

Does It invest on the fund or management company?

 

The private sector always rations capital better than governments. The only problem is that China should have been doing this years ago.