Chinese Investors Sell US Stocks and Bonds in August at Highest Level in 4 Years

Chinese Financial Authorities Appear to Take Measures to Defend the Yuan

Chinese investors sold the most U.S. stocks and bonds in August this year in four years. It is widely speculated that this move was to defend the falling value of the yuan amid concerns over the Chinese economy.

[Image source=Yonhap News]

On the 21st, major foreign media analyzed U.S. Treasury data and found that the People's Bank of China, mutual funds, and individual investors collectively net sold about $21.2 billion worth of U.S. Treasury bonds and stocks in August.

Among these, approximately $15 billion in U.S. Treasury bonds and $5 billion in U.S. stocks were sold. The amount of U.S. stocks sold by Chinese investors in August marked a record high on a monthly basis.

This U.S. stock sell-off is analyzed to be related to the Chinese authorities' efforts to defend the yuan exchange rate. As the default of Biguiyuan, China's largest private real estate developer, weak consumer spending, and slowing growth rate intensified the Chinese economic crisis, foreign capital outflows and pressure on currency depreciation have increased in the Chinese financial market.

Additionally, with the U.S. Federal Reserve's aggressive interest rate hikes widening the interest rate gap between the U.S. and China, foreign investors' exit from the Chinese bond market has accelerated further. The yield on the U.S. 10-year Treasury note, a global benchmark for bond yields, surpassed 5% intraday on the 19th (local time), exceeding the 5% mark for the first time in 16 years since July 2007, just before the global financial crisis. The yuan's value against the dollar fell 6.1% from 6.897 yuan at the end of last year to 7.318 yuan as of this date.

Stephen Ines, Managing Partner at SPI Asset Management, stated, "There is also analysis in the market that China is liquidating U.S. Treasuries to increase foreign exchange reserves as part of defending the yuan."

This content was produced with the assistance of AI translation services.