George Soros is not amused with BlackRock’s China push.
Just days after warning that anyone who underestimates the scope of Xi Jinping’s sweeping societal overhaul is in for a “rude awakening,” Soros penned a somewhat caustic Op-Ed for The Wall Street Journal, chiding BlackRock, which recently launched a suite of products tailored to Chinese investors.
“BlackRock takes its responsibilities for its clients’ money seriously and is a leader in the environmental, social and governance movement [b]ut it appears to misunderstand President Xi’s China,” Soros wrote, echoing an FT Op-Ed in which he said Xi’s “common prosperity” campaign is in fact an attempt to “put in place an updated version of Mao’s party.”
“No investor has any experience of that China because there were no stock markets in Mao’s time,” Soros wrote, on August 30. Also last month, Soros called Xi “the most dangerous enemy of open societies in the world.”
On Tuesday, Soros called BlackRock’s decision to “pour billions of dollars into China” “a tragic mistake” which is “likely to lose money for BlackRock’s clients and… damage the national security interests of the US and other democracies.”
BlackRock’s China launch was a milestone of sorts. The firm is the first foreign-owned mutual fund company to win Beijing’s approval. As Soros dryly noted, “the launch came just weeks after BlackRock recommended that investors triple their allocations in Chinese assets.”
At times, Larry Fink’s carefully-cultivated (curated?) “wokeness” makes for a rather stark juxtaposition with his own words and can contrast with BlackRock’s corporate actions. In November of 2018, for example, while speaking at a DealBook conference, Fink said of Jamal Khashoggi, “We don’t know who’s responsible for the murder. Everybody has their own theories. Nothing is black or white.”
The Khashoggi murder was about as “black and white” as things get. Mohammed Bin Salman had him killed. But money talks, and Bin Salman has a lot of it. Similarly, the first-mover advantage in China could be extremely lucrative for a foreign asset manager, Soros’s warnings notwithstanding.
If principle is all that matters (and depending on who he’s speaking to or what audience he’s writing for, Fink sometimes pretends that it is), there’s a strong case to be made that Xi’s dark campaign in Xinjiang (not to mention the eradication of Hong Kong’s democracy) makes China uninvestable. If you care nothing for principle, you might simply say the capriciousness inherent in Xi’s regulatory crackdown makes Chinese markets too unpredictable.
Mark Mobius doesn’t agree, though. Xi is “trying to create a level playing field,” Mobius told Bloomberg Tuesday. “These measures by China are making it safer for investors, including foreign investors, so I don’t see where George Soros is coming from.”
How much is Mark Mobius invested in China?
The China “situation” is either a big buying opportunity or a trap. I think China is uninvestable for at least six months. I’m pretty sure that Xi won’t wipe out capital completely. He wants new investments going forward. On the flip side, until the dust settles, as an investor, you don’t know where you stand right now.
Speaking of “situations”. This YouTube personality, a bit of a Cassandra, but nonetheless interesting and he is pointing out some financial instability occurring right now in China. Does it have the possibility to spread?
It is interesting how black swan events occur. You almost never see them coming. And boom it happens. In retrospect, you say it was obvious, but you never really see it coming.
https://youtu.be/VNI9MD9t8fE
It’s a trap. F Blackrock.
Soros – People who fled communism in Eastern European and Cuba tend to carry a hatred of the ideology to their grave.
China – does anyone else remember when Russia defaulted on their overseas debt? 1999? Pundits called the place uninvestable and confidently predicted that Russia would not be able to return to the capital markets for years, even decades. Less than a year later, a Russian sovereign bond issue was over-subscribed. Capitalism is not patriotic.
“They [capitalists] will furnish credits which will serve us for the support of the Communist Party in their countries and, by supplying us materials and technical equipment which we lack, will restore our military industry necessary for our future attacks against our suppliers. To put it in other words, they will work on the preparation of their own suicide.”
Vladimir Ilich (Ulyanov) Lenin, as reported by I. U. Annenkov in an article entitled, “Remembrances of Lenin,” Novyi Zhurnal / New Review, September 1961, p. 147.
Probably apocryphal, but applicable.
Yeah, well. He still lost in the end… Social democratic capitalism über alles
Xi’s and the CCP’s regulatory crackdown is a first step. Today we see China as a rising competitor economically and militarily. Both are areas of concern for the US and our economy. To the extent the latter Chinese challenge remains less substantial, one can reckon that Blackrock and others will probably realize returns on their investments. But China presents real financial risk in the longer term, depending upon an investor’s horizon.
I recall the George Bush initiative to implement the TPP, which would have enabled the US to develop at least a base of competition in opposition to China’s coming economic domination. And that base could have evolved had it been fed and encouraged by financial returns from the US.
But leave it to the republicans to shoot down the idea because Obama agreed that it served a practical need and wanted to implement it. McConnel would not abide, of course, obviously placing his politics ahead of the country. Good job, Mitch! Because Obama backed the TPP, you shot it down. Great! Then, if I recall correctly, the Chinese filled the void and set up a separate partnership with the same suppliers, enabling a long term hold on the broader swath of Asian sources.
Thanks a lot, Mitch! Thanks for enabling the Chinese and limiting the breadth of our long-term sourcing capacity. You’re such a good buddy for the US economy! We couldn’t possibly compete against China without you!
So here we are. More than managing your money with Blackrock itself or other houses, investing in China more starkly implies the need to plan for rapid retreat and withdrawal, in my opinion, assuming investment in China and eventual challenges to the US military in the Pacific (wherein the US presence only grows as we speak).
Consider Hong Kong. In light of Hong Kong I believe the South China Sea and Taiwan are potential hot zones for serious conflict. My narrow and subjective judgement is that Xi and the CCP are anxious to feel and exercise their own power.
Sure. We can all make our own choices. I say, “Good luck!” But as a matter of principle, I would not buy Chinese bonds or stocks. That’s just me. But I also reckon Xi and China are anxious about these issues and will assert themselves at the soonest possible time because that is their nature and circumstance.
I appreciate Soros’ effort but I lament that history has shown more often than not that greed triumphs in these types of situations…
What is still perplexing is the lack of spillover into developed markets from Xi common prosperity push. One argument is that the big tech companies are mostly shut out of China, except for Apple. Yet, it makes little sense to me that the world’s largest economy by PPP measure can take such dramatic steps towards Maoist style government to corporate governance and have so little effect. It is almost as if the market judgment is that there is more style than substance, which just seems a complete misreading of the facts