China attracted a significant net capital inflow into its bond and equities markets in April despite US President Donald Trump’s tariff war and can expect more foreign investment in Chinese assets, analysts said.
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This stands in contrast to market concerns over soaring Treasury yields and the wave of panic selling that followed Moody’s downgrade of the US sovereign credit rating last Friday.
The contrasting signals from Washington and Beijing highlight changing global investment dynamics, as more investors continue to move away from US dollar assets since Trump launched his global trade war in early April, according to analysts.
“Weaker US dollar, US bond yield top, China economic recovery … it’s time for Emerging Markets,” analysts from the Bank of America wrote in a note on Friday, as Moody’s downgraded US sovereign ratings from AAA to Aa1, citing fiscal risks due to increasing government debt.
Yields of 30-year US Treasuries topped 5 per cent during trading on Monday, the first trading day since the downgrade and the highest level since November 2023.
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In contrast, China’s State Administration of Foreign Exchange reported a net capital inflow of US$17.3 billion in April from both individuals and companies.