Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

What Foreign Investors Will Do Next As Falling Dollar Makes US Assets Cheaper

Stock-Markets / Investing Sep 25, 2007 - 10:54 AM GMT

By: Money_and_Markets


Best Financial Markets Analysis ArticleTony Sagami writes: Did you jump for joy when the Federal Reserve Bank lowered interest rates by half a percentage point? If you own a significant stake in the U.S. stock market, you probably did.

I say that because the Dow Jones added 417 points from last Tuesday (the day of the Fed announcement) through last Friday. For all of last week, the Dow gained 2.8% and the Nasdaq tacked on 2.7%.

U.S. stocks, however, weren't the only markets making big moves last week. Hard-asset investors did even better as the price of gold jumped to a 27-year high of $747.10 an ounce and oil futures hit an all-time intra-day high of $84.10 a barrel.

So it sounds like everyone made money, right? Well, not exactly.

Bond investors were wondering what hit them as the price of long-term Treasuries dropped more than two and a half points in the two days after the rate cut.

The dollar also got whacked, falling to a 15-year low against a basket of foreign currencies … an all-time low against the euro … and in line with the value of the Canadian dollar, something we haven't seen for more than three decades.

For some time here in Money and Markets , we've been telling you just how important the dollar's decline is. Today, I want to tell you about yet another implication of a falling greenback …

The Falling Dollar Makes U.S. Assets Cheaper for Foreign Investors

Foreign investors recognize that a weaker currency means they can scoop up prime U.S. assets at fire sale prices. And I think that's what they'll be doing over time.

Back in June, I told you about China's deal to buy a $3-billion stake in private equity company Blackstone Group . I said,

"China is laying the groundwork to go on a buying spree. Don't think for a minute that China bought into Blackstone because it hopes to make a big return on its investment. Rather, the Chinese government wants to learn the ins and outs of takeovers and private equity deals."

I still believe this is precisely what China is doing, especially in light of the falling dollar. And you know what else? I think other countries are lining up to do the same thing.

For example, the government of Abu Dhabi is now buying 7.5% of the Carlyle Group, another U.S. private equity buyout firm. In other words, they're willing to pay $1.35 billion to learn all about the buyout business.

Like China, Middle Eastern countries are flush with cash right now. And they're more than happy to scoop up U.S. businesses on the cheap. The declining dollar, and the unfolding credit crunch, are only making the deals more attractive.

The Dubai Stock Exchange's deal with Nasdaq is just one example of the cross-border deals that are getting announced …

Just last week, two major deals went down:

First, the Dubai stock exchange, which is controlled by the Dubai government, agreed to buy a 19.9% share of the Nasdaq. This will be the first time a government-controlled stock exchange will own a significant stake in an American rival.

Second, the government of Qatar's investment arm bought 20% of the London Stock Exchange and 9.9% of OMX, the Stockholm-based stock exchange.

And this is just the continuance of a trend. For example, Dubai ruler Sheik Mohammed bin Rashid al-Maktoum bought a stake in MGM Mirage in August.

Figure Out What Foreign Buyers Are After and You Can Make a Mint

Thanks to the plunging greenback, all of our dollar-denominated assets are on sale for the rest of the world. So don't be surprised if you see a repeat of the 1980s, when Japan scooped up some of our most treasured assets like Pebble Beach and Rockefeller Center.

As an investor, the trick is finding out what they'll be buying next.

Sheik Mohammed bin Rashid al-Maktoum purchased part of MGM Mirage in August.

In the case of those Middle Eastern buyers, it's tough to say what they'll target next. We know they're looking to diversify their economies away from oil. And the recent stock exchange purchases fit with their desire to establish themselves as financial centers. But I don't claim to know what they'll buy next.

However, I can tell you what I think China and other Asian countries will be looking for: Natural resources. They need more of just about everything — oil, uranium, natural gas, copper, iron, potash, etc. — to feed their expanding economies and their exploding populations. So, in my book, you won't go wrong by digging up attractively-valued companies in those industries.

You also won't go wrong by buying Asian firms that will be scooping up U.S. assets at fire-sale prices. In fact, not only can these firms benefit from favorably-priced acquisitions, they'll also protect U.S. investors from a further decline in the dollar since their share prices are tied to foreign currencies.

Best wishes,

By Tony Sagami

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

Money and Markets Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in