China Fund Retreats From Euro Zone Trying to Keep Their Powder Dry

THE WALL STREET JOURNAL, Friday, June 8, 2012


China Fund Retreats From Euro Zone: In Rare Interview, Chairman of $410 Billion Sovereign-Wealth Fund Says Rising Risk of Bloc’s Breakup Has Forced a Pullback

BEIJING–By Lingling Wei, Andrew Browne and Almar Latour

“The head of China’s giant sovereign-wealth fund sees mounting risks of a breakup of the euro zone, and says the fund has scaled back its holdings of stocks and bonds across the continent…

Mr. Lou said the rest of the world will be vulnerable to the european debt crisis, though its impact on Asia is likely to be relatively small. Still, the debt woes in Europe have caused a sharp slowdown in China’s exports, Mr. low said.  ‘Nobody can keep their powder dry if everyone else’s is wet,’ he said.”

This is a hunting/shooting metaphor.  Hunting with black powder guns is susceptible to weather, and, in the above case, euro dynamics. If the powder is wet, the powder does not ignite and therefore the gun does not fire.  In Pennsylvania, where I live, there is a rod an gun club whose motto is:  “Keep the powder and martinis dry.”



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