China Closer to Investing in the U.S. ?

An interesting long-term development to keep track of...per the below Marketwatch.com article, China and the U.S. have reached a historic economic agreement that will "help lay the groundwork to enable Chinese investors to buy and sell U.S. stocks and mutual funds.

*According to data from the U.S. Treasury Department from last June -
China held $922 billion in U.S. securities -- but only $29 billion of that in U.S. stocks. Most of the rest is held in U.S. government bonds. "

http://www.marketwatch.com/news/story/china-agrees-let-banks-buy/story.aspx?guid=%7B6F5A6292%2D0E2C%2D4AB3%2D8501%2D52DABC307E99%7D

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*Check out the decent Pros vs. Cons breakdown offered by CNBC.com:

*The 'Pro' View:
1) Liberalization of capital markets is a positive.

2) Investments made by China's institutional investors (would be politically) more preferable than by China's sovereign wealth funds.

3) Good for China, too, as it helps prevent future stock market bubbles by giving investors alternatives.

*The 'Con' View:
1) The announcement Monday did not give a dollar figure on how much new investment would be allowed, nor did it give implementation data.

2) Not likely to see a lot of buying from the Chinese any time soon, as they are still counting their losses from investments in Blackstone Group (BX) and Bear Sterns (BSC).

3) Neither Chinese fund managers nor their clients know much about the U.S. market and they'd be hesitant to jump into it.

4) It's an uneven playing field right now as U.S. investors are still not allowed to invest in mainland China shares.


http://www.cnbc.com/id/23999452/site/14081545


Data Courtesy: Marketwatch.com + CNBC.com.