Friday, August 19, 2005

Buying China

Institutional Investor (no free link) published a story in its August 2005 issue that described Bank of America's purchase of almost nine percent of China Construction Bank for $3 billion. There was an interesting quote about the transaction from an unnamed head of research at a leading Asian investment bank:

“Too many executives are reading Time Magazine and thinking China is the great dragon that is going to eat the world…The mentality is, (i)f I’m not there and China takes off, I’m toast. If I’m there with every other guy on the planet, I probably won’t lose my shirt entirely.”

I hate to beat a dead horse, but it sounds an awfully lot like this:

"Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally." --JM Keynes

Not to be outdone, Royal Bank of Scotland Group announced yesterday that it would buy a five percent stake in Bank of China for $1.6 billion. They'll be joined by Merrill and Li Ka Shing's combined $1.5 billion.

Pretty soon you're talking about real money. I had thought that Bank of America's 4% dividend yield was attractive until now.

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