From the Financial Times…..
The Chinese government is to use $3bn of its vast foreign exchange reserves to buy a 9.9 per cent stake in Blackstone, the US buy-out fund, in an unprecedented move that underlines Beijing’s desire to tap into the private equity boom.
The investment will coincide with Blackstone’s landmark $40bn-plus stock market listing, expected in the next few months, and will allow the private equity group to nearly double its original target of raising $4bn.
Not only are the Chinese subsidizing the US government (through the purchase of treasures) and the US housing market (through the purchase of Fannie Mae and other agency bonds. They are now going to pour money into the stock market. And this at a time when P/E ratio’s in America are already at a record high. This is just unreal.
I wonder if the Chinese are awere that takeover booms traditionally herald a crash in the stock market?
Of course, 3 billion is small change in the grand scheme of things. It is certainly small change compared to the 300 to 400 billion that the China’s Central bank is going to spend on the US this year (on present trends). Still, it cracks me up. Next thing I know China’s central bank will be playing the lottery here in the US.