SHANGHAI (Reuters) – Ray Dalio, founder of Bridgewater Associates, expressed support on Wednesday for China’s abrupt decision to suspend Ant Group’s record $37 billion listing, citing the need to curb risks from financial innovation.
At the same time, Dalio, who calls himself a “chronic bull on China”, also told an online conference that not investing in the rising Asian power is “very risky”.
Earlier this month, Chinese regulators shocked global investors by suspending the Shanghai-Hong Kong dual-listing by fintech giant Ant, just days before what would have been the world’s largest stock market debut.
Dalio brushed aside concerns that the surprise move could dent investor confidence, arguing there’s a risk of being too loose on innovation.
“Ant is a whole new concept in terms of banking, and almost could replace or threaten the banking system in China. And it hasn’t yet been properly established in terms of regulatory review and the like,” Dalio told the China Town Hall 2020.
“And it’s important to be clear that what we have in China is state capitalism. So the state is going to control those things,” said Dalio, describing Chinese regulators as “reasonable, caring, and highly-informed.”
Dalio, whose hedge fund giant is famous for making money during the 2008 financial crisis, said even in the United States regulators struggle to strike the balance between freedom and restrictions, and “there’s always a wrestling match on that.”
After studying rises and declines of reserve currency empires over the last 500 years, Dalio judged that “China is now evolving into that role”.
“To be absent (from) the Chinese capital markets is very risky,” Dalio said, adding “the fundamentals are undermining the U.S. dollar.”
He added that the U.S. is “creating a lot of debt and printing of a lot of money, which in history was a threat to reserve currencies.”
Dalio, who first visited China 36 years ago, said “people have accused me of being biased, naive, and in some cases unpatriotic. I think I’m just being objective.”
(Reporting by Samuel Shen and Andrew Galbraith; Editing by Kim Coghill)