Chinese Investors Dump Record Amount of US Stocks and Bonds.

Chinese investors sold a record amount of US stocks and bonds in May, totaling $42.6 billion, due to ongoing diplomatic tensions between the two countries. The sales in the first five months of the year reached $79.7 billion, the highest ever for that period. The majority of the sales were in Treasury bonds, followed by agency debt and stocks. Chinese investors may be diversifying away from US assets due to an overvalued US dollar, expensive US equity valuations, and increased liquidity needs. However, the data may not fully capture China's holdings as securities held in custodial accounts in third countries are not included. Despite this, the prospects of Federal Reserve policy easing and a weaker dollar may discourage Chinese investors from holding too many dollar assets. [Extracted from the article]

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