Latest news with #USassets
South China Morning Post
6 days ago
- Business
- South China Morning Post
How mainland capital flight is reviving Hong Kong market's mojo
Since US President Donald Trump launched his assault on the global trading system in early April , one theme has dominated the financial market landscape. Contrary to the expectations of many investors, shifts in capital flows emerged as a more important determinant of sentiment than the economic impact of higher tariffs. Nowhere is this more apparent than in Asia, the region most at risk from the onslaught of protectionism because of its greater dependence on trade . The unexpected surge in Asian currencies in response to Trump's tariff blitz drew attention to many Asian economies' huge balance of payments surpluses, part of which were recycled into foreign assets, especially US Treasury bonds. Doubts over the willingness of Asian investors to continue to help fund the large US current account and fiscal deficits amid concerns about the safety of US assets fuelled speculation about 'de-dollarisation'. An alarming report by Eurizon SLJ Capital on May 6 predicted the US dollar – which suffered its worst start to the year since 1973 – faced an 'avalanche risk' as Asian investors began to unwind their huge stockpile of dollar holdings. However, while there is some evidence of a foreign buyers' strike, the US has yet to suffer capital outflows. In China, by contrast, layers of snow have been tumbling down for some time, particularly when it comes to foreign direct investment. Last year, net FDI plunged by US$168 billion, the biggest capital flight since 1990, according to data from the State Administration of Foreign Exchange (Safe). While inbound investment fell to just US$4.5 billion, outbound investment reached US$173 billion as Chinese companies continued to expand abroad The wave of outbound FDI attests to the economic and geopolitical forces pushing Chinese firms to shift part of their operations abroad in a trend reminiscent of Japanese companies' overseas investment spree in the 1980s. Yet while the previous surge in Chinese outbound investment in 2014-2016 was dominated by mergers and acquisitions, the current crop of foreign transactions is focused on greenfield projects – assets that are built as opposed to acquired – in emerging markets, especially Southeast Asia. According to a report by Rhodium Group last September, 'growing trade barriers abroad, pressure to diversify supply chains and the growing competitiveness of Chinese firms in advanced industries' have given rise to a 'new generation of China's overseas investment [with] very different objectives and destinations than in the previous decade'.
Yahoo
6 days ago
- Business
- Yahoo
Trump's Economy Is Riding A Tsunami Of Inflows — So Much For 'Sell America'
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Despite fears that President Donald Trump's aggressive tariff policy would crush the appeal of U.S. assets, foreign investors are doing the exact opposite—buying American securities at a record-setting pace and powering one of the strongest rallies in recent history. According to May's Treasury International Capital System (TICS) data, total net capital inflows into the U.S. reached an unprecedented $1.76 trillion over the 12 months ending in May 2025. That includes everything from Treasuries and corporate bonds to stocks and Treasury bills. These numbers flatly defy the doomsday narrative of an "end to U.S. exceptionalism" that followed Trump's April 2 tariffs, which had briefly sent stocks, bonds and the dollar tumbling in unison. Trending: Tired of Grid Failures and Charging Deserts? This Startup Has a Solar Fix and $25M+ in Sales — 'US Exceptionalism' Was Supposed To End With Trump — Instead, It's Breaking New Records In a note shared Monday, veteran Wall Street strategist Ed Yardeni said that despite the noise, investors abroad are not fleeing U.S. markets. "Doomsters warn that foreign investors are losing their confidence in U.S. Treasuries and in the U.S. dollar," he said. "Yet, the Treasury's latest TICS data show that they remain strong buyers of U.S. debt." Foreign investors poured $597 billion into U.S. equities over the past year—setting a record pace that aligns closely with the dramatic rebound in U.S. stock markets. Since the correction low on April 8, the S&P 500 – as tracked by the Vanguard S&P 500 ETF (NYSE:VOO) – has surged 26.4% breaking new all-time highs. During May alone, $114 billion flowed into U.S. stocks, while another $146 billion was allocated to Treasuries and bonds. Foreign Investors Drive Wall Street Boom A key insight from the data is that private foreign investors, rather than official government institutions, are leading the charge. Of the $1.76 trillion in inflows, just $33.5 billion came from official foreign accounts, while an overwhelming $1.73 trillion was attributed to private investors—pension funds, asset managers and institutions with a long-term mandate for returns and stability. The U.S. bond market also witnessed robust international buying. Foreign purchases of U.S. bonds totaled $941 billion in the past year, including $541 billion into Treasuries, $267 billion into corporate bonds and $133 billion into agency paper. In the short-term market, inflows into Treasury bills hit $336 billion over the same period, with private investors accounting for $193 billion of that total. This surge in demand helps explain why long-term bond yields have remained surprisingly stable despite fiscal pressures and rate volatility. The 10-year Treasury yield has hovered between 4.25% and 4.75% for much of the year, a range that Yardeni said reflects a normalization in bond pricing last seen before the Great Financial Is The Dollar Still Weak? One piece of the puzzle remains confusing. Despite the massive foreign capital inflows, the U.S. dollar index (DXY) has plunged by 10% in 2025. Yardeni called the dollar's drop a "correction," not a new long-term trend. He said the divergence between flows and dollar performance may reverse soon, especially as bond and equity demand remains solid and U.S. growth stays ahead of global peers. Faith In US Market Dominance Holds Firm The strength of U.S. inflows suggests that global investors see Trump's trade war not as a deal-breaker, but a temporary hurdle. "Our faith in the kindness of strangers has been validated by the latest Treasury data," Yardeni said. The latest data leaves little doubt: despite trade tensions, fiscal ballooning and a shifting global landscape, U.S. markets remain the preferred destination for global capital. And as long as American assets continue to deliver returns—and relative economic outperformance—foreign investors are not just staying in the game, they're doubling down. For now, the "Sell America" narrative has been buried under $1.76 trillion worth of foreign conviction. Read Next: Named a TIME Best Invention and Backed by 5,000+ Users, Kara's Air-to-Water Pod Cuts Plastic and Costs — And You Can Invest At Just $6.37/Share If there was a new fund backed by Jeff Bezos offering a 7-9% target yield with monthly dividends would you invest in it? Image created using photos from Shutterstock. This article Trump's Economy Is Riding A Tsunami Of Inflows — So Much For 'Sell America' originally appeared on
Bloomberg
06-06-2025
- Business
- Bloomberg
Nomura Flags Risk of Sharp Yen Rally on US-Japan Policy Pressure
Japanese investors pivoting out of US assets as yen yields rise — combined with implicit pressure from Washington over the exchange rate during trade talks — could push the currency about 6% higher against the dollar in the coming months, according to Nomura Holdings, Inc. The investment bank, among Japan's largest, now recommends shorting the greenback versus the yen, targeting a move in the pair to ¥136 by the end of September, from around ¥145 currently. Nomura's Yusuke Miyairi, Yujiro Goto and Dominic Bunning expect that the Bank of Japan 's steady pace of rate hikes, will 'encourage domestic investors to increase more domestic bond than overseas bond exposure,' they wrote in a Friday report to clients.
Bloomberg
29-05-2025
- Business
- Bloomberg
US Equity Futures, Dollar Boosted by US Tariff Ruling
US assets got a boost Thursday after a vast majority of President Donald Trump's global tariffs were deemed illegal and blocked by the US trade court. Bloomberg's Mary Nicola reports. (Source: Bloomberg)
Bloomberg
29-05-2025
- Business
- Bloomberg
Live Q&A: What's Behind Asia's Shift Away From US Assets?
As Donald Trump tries to remake global trade, the historic dominance of US assets is under pressure. After Taiwan's currency saw the biggest surge against the dollar in almost 40 years in early May, some money managers are saying the spike signals the acceleration of a bigger trend of moving investments elsewhere. In a Live Q&A, Bloomberg's Haidi Stroud-Watts, Diana Li, Masaki Kondo and Ruth Carson discuss what's driven Asia's shift away from US assets, and what's next for investors. Tune in on Thursday, May 29 at 10 a.m. HKT. Bloomberg digital subscribers and Terminal clients have the exclusive opportunity to ask our team live questions. This conversation will be recorded and be made available to listen and share.
