How Exposed are U.S. Investors to China? (Seafarer Funds, 5 min read)
Nicholas Borst, Director of China Research at Seafarer, de-mystifies the actual positions that US investors hold in the Chinese capital markets. ‘Foreign Direct Investments’ (FDIs) into China have nearly doubled since March 2011, and US Treasury Department data shows that Chinese companies who registered offshore entities in the Caribbean have become major sources of US foreign holdings. But in a broader context, US investors own about only 2% of the domestic Chinese stock market, and Chinese securities account for less than 1% of U.S. portfolio holdings.
Why does this matter? Despite official data suggesting a high level of US capital involvement in Chinese businesses, in adjusted terms, U.S. investors don’t seem particularly important as a source of financing for them. While it’s desirable for US investors if China loosens up its accessibility with the international market and gets a greater weighing in global indices, uncertainties regarding the actual growth potential of the Chinese economy might be something that US investors want to take another look at.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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