Chinese Wealth Management Funds

WMF...Wealth Management Fund. Dear readers, you may want to pay attention to WMFs...they are the Chinese equivalent of private equity finds and venture capital groups in America and other western countries. Venture capital and private equity are important in market-driven economies because they provide start-up and development money to small and mid-size businesses that often gave trouble getting funds from normal banks. As an example, neither Apple nor Microsoft nor Intel would have become large, leading companies without venture capital infusions. Why follow the Chinese WMFs? Because they support start-up businesses, often ignored in China's centrally planned and managed economy. AND one of them has just given signs of going belly up. It was supposed to pay an 11% dividend/interest in November but didn't. Its investors are waiting for news of the money they invested. The Chinese government is now investigating WMFs in general. The fear is that because one WMF failed, others may be fragile. And if Chinese investors stop putting their money into WMFs, the future of Chinese start-up companies will be jeopardized. Experts are already estimating that such a result could reduce China's economic output by several percentage points. This would impact not only China but Asian and western economies as well. So, watch WMFs...they are probably more important to the world's economies than we would have suspected.