Global holdings of Chinese stocks and bonds have surged to more than $800bn as investors bought assets in the country at a record pace despite souring relations between Beijing and the international community.
The drive into China’s markets by global investors has come even amid tensions between Beijing and Washington over issues from corporate audits to Beijing’s repression of Uyghurs in Xinjiang, which the US has labelled genocide.
It has also coincided with a crackdown by Beijing on Chinese listings in US capital markets, including a probe into data security at ride-hailing group Didi Chuxing announced just days after its $4.4bn New York initial public offering.
Offshore investors have bought a net $35.3bn of Chinese stocks in the year to date via trading platforms that link Hong Kong with exchanges in Shanghai and Shenzhen, according to Financial Times calculations based on Bloomberg data. That was about 49 per cent higher compared with a year earlier.
Foreign investors have also bought more than $75bn in Chinese Treasuries in the year to date, according to figures from Crédit Agricole, representing a 50 per cent rise from a year earlier.
The enthusiasm for Chinese assets from foreign buyers has been fuelled by the country’s swift rebound from the Covid-19 pandemic but concerns are surfacing that its economic growth is slowing.
Five more stories in the news
1. Global inflation puts tension on governments Jay Powell, the chair of the Federal Reserve, said the US central bank was ready to intervene if inflation spiralled out of control, but stressed that he expected price increases to ease later in the year. In India, the rising price of essential products has piled pressure on consumers and posed a challenge for Narendra Modi’s government, while Britain’s inflation rate rose to 2.5 per cent in June.
2. Brussels unveils plan to reduce Europe’s carbon footprint Brussels set out sweeping plans on Wednesday for the EU to become the world’s first mover on achieving net zero emissions in order to limit global warming, with a strategy targeting all sectors of the economy and trade.
Opinion: Lack of a truly global response to the pandemic augurs badly for common action on climate change, writes Martin Wolf.
3. UAE and Saudi Arabia close to oil output deal The two nations have reached the outline of a deal that would unlock an agreement by Opec and its allies to raise oil production, four delegates and advisers to the group said on Wednesday, but cautioned discussions are continuing and the deal is still to be finalised.
4. Facebook says FTC chair should step back from antitrust case The social media platform has requested that Lina Khan, the new chair of the Federal Trade Commission, step back from deciding whether to pursue an antitrust case against the tech group, marking an escalation in the battle between the regulator’s chief and Silicon Valley’s largest companies. For the latest tech news, subscribe to Chris Nuttall’s #techFT newsletter.
5. Sumitomo Mitsui takes stake in Jefferies Sumitomo Mitsui Financial Group has agreed to pay $386m for a stake of up to 4.9 per cent in Jefferies as the conservative Japanese megabank turns its sights towards the rich pickings on Wall Street and marks a return to US-focused M&A by Japanese banks after a hiatus of more than a decade.
Coronavirus digest
New Zealand’s central bank said it would halt bond purchases this month as the Pacific nation became one of the first in the developed world to step back from a pandemic monetary stimulus.
South Korea is set to tighten Covid-19 restrictions across most of the country as it battles its worst outbreak yet.
The mayor of London and the leaders of Scotland and Wales have broken ranks with prime minister Boris Johnson’s government by insisting on mask wearing on public transport after most restrictions end in England next week.
Follow the latest with our coronavirus live blog and sign up for our Coronavirus Business Update newsletter for more Covid-19 news.
The day ahead
China GDP The focus will be on any signs of economic sluggishness when second-quarter figures are announced today. Here are five things to look out for after Thursday’s announcement.
Morgan Stanley earnings Morgan Stanley will close out this week’s US bank earnings announcements. It follows Bank of America and Citigroup, which reported declining revenue on Wednesday.
Merkel makes last official US trip Angela Merkel said she would discuss Germany’s differences with the US over Nord Stream 2 during her visit with Joe Biden on Thursday — likely to be her last as Germany’s chancellor — but did not know whether they would actually reach agreement.
More in German politics: Germany’s spy chief has warned that foreign intelligence agencies could be seeking to influence September’s Bundestag election.
What else we’re reading and watching
Can the Olympics succeed behind closed doors? The Tokyo Games promised to revive Japan’s self-confidence after decades of economic stagnation, opening its doors to the world as an equal, and spiritually reconnected to the youthful nation of the 1964 games, when the country announced itself as a democratic power. Covid threatens those goals.
More Tokyo Olympics news: A former Nomura banker who quit his job to stage a hunger strike close to Tokyo’s Olympic stadium expects his health to be dangerously compromised by the opening ceremony next week.
Thank you to readers who took our poll yesterday. Fifty-nine per cent of respondents said the Tokyo Olympics should not proceed as planned given the Covid-19 situation.
Private credit joins private equity to freeze out banks For private equity firm Thoma Bravo to get its recent $6.6bn acquisition of Stamps.com over the line, the group turned to private lenders for $2.6bn in debt financing. The deal underscores the massive firepower of private credit funds and how they are putting that cash to work, according to people involved in recent deals.
Cuba needs fresh thinking to prevent further protests If Cuba’s biggest wave of protests in decades was spontaneous, the government’s response was anything but, writes FT’s Michael Stott. The government’s response was as old as the challenges facing the single-party state: a failed economy and an ossified political system.
Competition enforcement is harder than it looks After years of growing disquiet over corporate consolidation and the dominance of big companies, governments are springing into action to block corporate mergers. But enforcement cases tend to produce lists of “don’ts” at a time when industry really need some “dos”, writes Brooke Masters.
Go deeper: A read on how Biden is styling himself as a 21st-century ‘trust buster’, in the tradition of Theodore Roosevelt who instigated the break-up of Standard Oil in 1906.
‘One by one, my friends were sent to the camps’ A couple of years ago, Tahir Hamut Izgil was an Uber driver in Washington DC. Few of his passengers would have known he was also a famed Uyghur poet who came to the US in 2017 fleeing persecution by his government. Now, as he applies for asylum, he’s chosen to tell his story. (Atlantic)
Food & Drink
Grilled peaches and silken tofu Griddling peaches, as Ravinder Bhogal does in this recipe, ekes out their natural sweetness. They pair perfectly with the bittersweet Thai basil in the zesty gremolata.
Source: Economy - ft.com
