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Earlier quoted context omitted.
I think most large wealth funds would have an issue too. That would be my guess.
By the time it gets repackaged into derivatives and index funds, who will really know. Investor's aren't amoral, just creating plausible deniability via complexity.
Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
Investors with other peoples money receiving fees based on annual return. What do they care about the risks?
Earlier quoted context omitted.
A possibility is that they believe that country no longer has much to gain from undervaluing its currency as its neighbors are starting to be real competitors in manufacturing, and now they're more interested in building up a consumer class.
This. China is transitioning quickly to a consumer based economy from manufacturing.
> [These sales] will help finance the deficits without running up a dangerous amount of debt in foreign currency.
That's why they're selling!
The arbitrage, really, is that sales of this nature are very technical and not well understood by consumers. They signal bear market like a yield curve inversion does. But because it's so technical, the average person's confidence isn't impacted the same way that a headline, "China is Hunting for Foreign Buyers of its Empty Apartments" would.
Even though both have similar macroeconomic effects, given enough scale.
Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
I wouldn't invest in foreign debt where I can't even safely go to that country and contest! => Thirteen Canadians have been detained in China since Huawei executive’s arrest, says Ottawa https://www.theglobeandmail.com/politics/article-thirteen-ca...
Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
"There is a Hokkien phrase, 'Gar gee nang.' It means, our own kind of people. And you're not our own kind."
"Because I'm not rich? 'Cause I didn't go to a British boarding school, or I wasn't born into a wealthy family?"
"You're a foreigner. American. And all Americans think about is their own happiness.
"Don't you want Nick to be happy?"
"It's an illusion. We understand how to build things that last. Something you know nothing about."
Funny thing is that I feel like it is indeed rare for cultures-countries to think about building things that last. But the US is actually one of the few countries that does---whereas China can't float this level of debt at attractive rates because it is NOT long term focused. It keeps doing insane, credibility-destroying things. Yet always talks about how it is a long term actor.
Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
They might do it for 3x the return: "China’s government bonds were among the world’s best performers in 2018, returning 7.7 percent, while U.S. Treasuries earned 0.8 percent, ICE Bank of America Merrill Lynch data show. That gain is in yuan terms, however, and the yuan dropped 5.4 percent against the U.S. dollar." So 7.7 - 5.4 = 2.3% which is almost 3x 0.8% return on US Treasuries.
Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
Interesting line re: this from last year's moviee Crazy Rich Asians: "There is a Hokkien phrase, 'Gar gee nang.' It means, our own kind of people. And you're not our own kind." "Because I'm not rich? 'Cause I didn't go to a British boarding school, or I wasn't born into a wealthy family?" "You're a foreigner. American. And all Americans think about is their own happiness. "Don't you want Nick to be happy?" "It's an i…