George Soros ups the ante in war of words with BlackRock over China, exposing contrast of bets on world’s second-biggest market
- Soros, an early investor in Hainan Airlines, calls BlackRock’s expansion in China ‘tragic mistake,’ in an opinion piece in The Wall Street Journal
- Soros, the founder of Quantum Fund and the Open Society Foundation, has written two opinion pieces in the Journal since August 13
One of America’s earliest investors in China fired an opening salvo in a potential war of words with the biggest global asset manager this week, as two of Wall Street’s best-known investors spar over the investment potential of the world’s second-largest economy.
In the other corner is BlackRock’s chairman and CEO Larry Fink, who believes that the lack of exposure to China among global investment portfolios deprives investors from the nation’s growing middle class and rising income.
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“Pouring billions of dollars into China now is a tragic mistake,” Soros wrote in the Journal on Monday, his second contribution to the newspaper’s Op-Ed pages on China since August 13. “It is likely to lose money for BlackRock’s clients and, more important, will damage the national security interests of the US and other democracies.”
Soros, whose investment firm took a 25 per cent stake in Hainan Airlines in 1995 before exiting nearly two decades later, argued that global financial firms such as BlackRock are focusing on potential profits from further opening up of China’s financial system, even as Washington DC and Beijing are in a “life and death conflict” over their systems of governance.
At the same time, China has engaged in an aggressive crackdown this summer on technology firms, including rewriting the rules for companies seeking to list overseas if they hold the personal data of 1 million or more Chinese people.
Despite those headwinds, BlackRock and other global financial institutions are pressing ahead with expansion plans in the mainland as Beijing further opens up the country’s financial sector to foreign institutions.
BlackRock won a license in June to become the first global asset manager to started a wholly owned onshore mutual fund business in China. In August, its research unit called for investors to increase their allocations in Chinese stocks and bonds, saying it should be more broadly represented in portfolios.
BlackRock did not immediately respond to a request for comment on Tuesday.
In its World Economic Outlook report in July, the International Monetary Fund said that China would be the second fastest-growing economy behind India this year and one of the most exuberant globally next year.
Financial firms also are aggressively expanding their wealth offerings in the mainland, Hong Kong and Singapore and buying out local partners to tap the potential upsurge in incomes.
Fidelity International also confirmed last month that it had received approval from Chinese regulators to establish a wholly foreign-owned mutual fund company in China, the second foreign asset manager to receive such an approval after BlackRock.