Tuesday, May 22, 2007

China: BlackStone Investment, Rate Raise and Stock Bubble

  • China is investing $3 billion in BlackStone. Despite the amount is relatively insignificant (about 0.25% of China’s total forex reserve), it marks the first action by China to diversify its $1.2 trillion forex reserve into riskier assets.
  • Chinese stock market defies not only gravity, but also central bank’s monetary policy. Shanghai Composite Index has hit two consecutive records in the two trading days after the central bank raised interest rates in an attempt to curb the economy (the stock market, primarily) from overheating…