Oct 2, 2019

Foreign investors have already pulled back from China

Data: Institute of International Finance; Table: Axios Visuals

Investment in Chinese assets fell significantly this year as a combination of the trade war and increasingly attractive opportunities elsewhere spread money across a variety of locations in the emerging world.

The big picture: While the economies of many emerging countries are feeling the pressure from China's slowdown and reduced global trade, foreign investment has picked up notably this year from 2018.

Why it matters: The White House has reportedly floated the idea of cutting off U.S. investors' access to some Chinese investments, but data shows President Trump's trade war has already significantly reduced the level of Chinese securities purchased by foreigners.

What they're saying: The flow of funds out of China has largely gone to other emerging countries, particularly Saudi Arabia.

  • Having just this year joined emerging market indexes, Saudi Arabia has attracted $21 billion in foreign portfolio equity inflows, "becoming the top equity investment destination among emerging markets," Jonathan Fortun, an economist at the Institute of International Finance, told Axios.
  • Nigeria and Ukraine also have seen significant inflows as investors pull back on Chinese assets, Fortun said.

Yes, but: Chinese investments bounced back in September when emerging market stocks and bonds registered nearly $38 billion of inflows, according to IIF data released Tuesday.

  • That was one of the strongest months this year, and Chinese stocks drew $9.2 billion, a substantial increase over August's $1.6 billion inflows.

Go deeper: U.S. ban on Chinese investments would take trade war to a new level

Go deeper

How the China trade war threatens U.S. manufacturing jobs

Inside Fuyao Glass, a Chinese-owned factory in Moraine, Ohio. Photo: Andrew Spear/Washington Post/Getty Images

Automation and offshoring have destroyed millions of U.S. manufacturing jobs in the last 2 decades, but another, less-discussed threat to those jobs is the U.S.-China trade war.

The big picture: Almost a fifth of all manufacturing jobs in the U.S. are created by foreign companies that put their factories in American towns to get closer to the U.S. market, according to Brookings, and around a quarter of U.S. exports come from factories owned by foreign countries, reports the Washington Post.

Go deeperArrowOct 3, 2019

Chinese consumers shun American products

Illustration: Rebecca Zisser/Axios

American brands are facing challenges in the Chinese market, as trade and geopolitical disputes wage on for the two countries, the Wall Street Journal reports.

Why it matters: Western executives had long-established plans to dominate the Chinese market, but global consumer brands now have a smaller market share in China than at any other time since the last financial crisis, per WSJ.

Go deeperArrowOct 12, 2019

Investors sell stocks and hide cash in money market funds

Data: Investment Company Institute; Chart: Andrew Witherspoon/Axios

Investors moved an additional $20.2 billion into money market funds last week, while pulling $13.8 billion out of equity funds, data from the Investment Company Institute shows.

Why it matters: The increased desire for money market funds, which are ostensibly savings accounts, has come as yields on the 10-year Treasury note fell from 2.51% on April 3 to 1.59% on Oct. 2, showing it's fear rather than greed driving fund flows.

Go deeperArrowOct 11, 2019