Chinese investors have sold a record amount of US stocks and bonds in August, reaching a four-year high, according to data released by the US Treasury Department. The sales of equities totaled approximately $5.1 billion, marking a new monthly record for Chinese investors in the US stock market. Additionally, Chinese investors also sold agency bonds.
The data further revealed that China’s holdings of US Treasuries fell to $805.4 billion, reaching the lowest level since May 2009 when Beijing held $776.4 billion in US debt. This surge in sales has led to speculation that Beijing may have used the funds for intervention purposes to support the weakening Chinese national currency, the yuan.
In August, the yuan experienced its lowest exchange rate against the US dollar since November, prompting the Chinese government to instruct state-owned banks to increase their intervention in the currency market. However, it remains unclear whether the decline in Chinese holdings of US securities was solely driven by currency stabilization efforts.
Gennadiy Goldberg, head of US rates strategy at TD Securities in New York, commented on the situation, stating, “It’s unclear whether this was for currency purposes because Chinese reserves have not declined, which is odd. It’s really difficult to tell why their holdings are declining so much, but it could certainly be to stabilize the currency.”
Foreign countries’ total holdings of US Treasuries amounted to $7.707 trillion in August, reflecting a year-on-year growth of approximately 2.8%. Japan remained the largest foreign holder of US government debt with $1.116 trillion.
The significant sell-off of US securities by Chinese investors highlights the challenges both countries face in their economic relationship. Recently, the Biden administration has moved to restrict US investments in Chinese tech firms, exacerbating tensions between the two economic giants.
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This news article reveals a concerning trend as Chinese investors have sold a record amount of US stocks and bonds. This indicates a four-year high in such sales, amounting to approximately $5.1 billion. Concurrently, China’s holdings of US Treasuries have fallen to their lowest level since May 2009, reaching $805.4 billion. This decline raises speculations of possible intervention to stabilize the weakening yuan.
The decline in Chinese holdings coincides with the yuan’s lowest exchange rate against the US dollar since November. Consequently, the Chinese government has instructed state-owned banks to increase their presence in the currency market. However, the exact reason for the decline remains uncertain, as it is unusual for Chinese reserves to remain unaffected despite the decrease in holdings.
The article also highlights the overall growth in foreign countries’ holdings of US Treasuries, which reached $7.707 trillion in August, marking a year-on-year increase of approximately 2.8%. Japan continues to maintain its position as the largest foreign holder of US government debt, with holdings amounting to $1.116 trillion.
This recent sell-off of US securities by Chinese investors sheds light on the complexities and challenges within the economic relationship between the two nations. Moreover, the Biden administration’s restrictions on US investments in Chinese tech firms contribute to the ongoing tension between these global economic powers.
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