Billionaire Ray Dalio explains why investors should buy Chinese debt regardless of who wins the election
- Billionaire Ray Dalio told Bloomberg that investors should buy Chinese bonds regardless of who wins Tuesday's election.
- The Bridgewater Associates founder said no matter who's the next president, the US will run larger deficits and sell more debt, causing global investors who are overweight in US bonds to diversify into China.
- "I'd much rather own Chinese bonds than US bonds," Dalio said, citing a Chinese currency benefit from increased capital flows.
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Billionaire hedge fund manager Ray Dalio told Bloomberg on Monday that the world is "structurally underweight China" and investors should buy Chinese bonds for diversification no matter the outcome of the US election.
The Bridgewater Associates founder said that regardless of who wins the presidency, the US will run larger deficits and sell more debt, according to Bloomberg. This will cause global investors who are overweight in US bonds to diversify into China.
Citing the favorable capital inflows in China, he said: "I'd much rather own Chinese bonds than US bonds." China's 10-year government bonds yield over 3%, while US treasuries yield less than 1%.
Dalio also said he understands the need to have a "significant portion" of a portfolio in China: "The interest-rate differentials are favorable. The growth rate differentials are favorable," he said.
He added that the Renminbi, the Chinese currency, will become a reserve currency faster than many investors expect.
"I don't believe the renminbi will be a viable reserve currency quickly," Dalio said. "But I do believe it will happen much faster than anybody expects."