- Brian Snyder/Reuters
- Ray Dalio has advised investors to bet on China or risk missing out on their piece of the next global empire.
- “Would you have not wanted to have invested in the industrial revolution and the British Empire?” the hedge fund manager asked in an interview on YouTube.
- Dalio sees China as a competitor to the US and recommends investors have “bets on both horses in the race.”
- However, he warned the US-China trade war could spread to a capital or embargo war or escalate even further, which would make him bearish on both countries.
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Ray Dalio has advised investors to bet on China or risk missing out on their piece of the next global empire, days after the Trump administration officially labeled the world’s second-largest economy a “currency manipulator” and announced tariffs on virtually all Chinese goods.
“Would you not have wanted to invest with the Dutch in the Dutch empire?” asked the founder and cochief investment officer of Bridgewater Associates, the world’s largest hedge fund, in an interview on YouTube. “Would you have not wanted to have invested in the industrial revolution and the British Empire? Would you have not wanted to have invested in the United States?”
‘I think [China is] comparable,” Dalio said, highlighting the four-fold growth in Chinese equity markets and the seven-fold growth in its bond markets over the past decade. He views China as a competitor to the US and recommends investors play both sides. “You want to be, if you’re diversified, having bets on both horses in the race.”
However, the recent escalation in the yearlong US-China trade dispute has given him pause. “Unfortunately the war with China is spreading,” he wrote in a LinkedIn post.
“Yesterday it spread to a currency war that will affect all currencies. It could spread to a capital war and/or an embargo war. In a worst case, it could go beyond that. We need to watch it closely.”
Dalio pointed to the ultimate scale of the two countries’ trade squabble as a key determinant of his investing stance.
“If there’s no big war, I’m bullish on China, and if there’s a big war, I’m bearish on both the US and China,” he said.
Dalio also flagged “three big forces” for investors to watch: the point where there’s an economic downturn and central banks can’t cut interest rates further and their asset purchases cease being effective, when rising inequality sparks “extreme” conflicts between the rich and poor, and the battle for global dominion between the rising power of China and the incumbent world power, the US.