It’s a truth universally acknowledged: Wall Street loves China.
Over the past year, the Financial Times reported, investors worldwide have bought more than $800 billion worth of Chinese stocks and bonds, a 40% increase compared with the year before. Goldman Sachs, JP Morgan Chase, Morgan Stanley, Citigroup, BlackRock, you name it, America’s largest and most powerful financial institutions are racing to do business in China. The legendary investor Ray Dalio, the founder of the world’s largest hedge fund, warned last year that the world was underweight Chinese stocks and bonds. Charlie Munger, Warren Buffett’s right-hand man, has repeatedly sung praises of the Chinese government for allowing businesses to flourish and people to make money.
Driven by an insatiable hunger for growth and profit, Wall Street has long looked to the world’s second-largest economy for opportunities. It helps that China exemplifies the kind of certainty that authoritarian regimes supposedly provide. As Larry Fink, the CEO of BlackRock, the world’s largest money manager, said 10 years ago: “Markets don’t like uncertainty. Markets like actually totalitarian governments, where you have an understanding of what’s out there.”
So it’s no wonder that when the hottest Chinese tech companies decide to go public on US exchanges, their order books are usually oversubscribed, meaning that demand by eager investors exceeds the available supply of shares. As of May, the US-China Economic and Security Review Commission said, there were 248 Chinese companies listed on US exchanges with a total market capitalization of $2.1 trillion.