China watches US election closely for Trump or Biden win
Market ties between China and the United States will deepen regardless of the election results
Analysts and investors widely expect Trump’s victory in the 28-month trade war with China to put pressure on Chinese stocks in the short term..
«With Trump, Chinese companies don’t know where the next blow will come from, making it difficult for them to make capital allocation decisions», – said Will Malcolm (Will Malcolm), Portfolio Manager, Aviva Investors.
«With Biden, this madness will have at least some understanding of the risks, and it will be easier for companies to make decisions. Hence, it will benefit Chinese stocks.».
Whatever the outcome of the election, ties between the US and Chinese financial markets will only deepen, despite the trans-Pacific trade war and uneasy diplomatic relations..
Amid talk of financial disengagement between the world’s two largest economies, China has accelerated its capital market reforms, making it easier for foreigners to access stocks and bonds while promoting the international use of the renminbi..
According to the latest data from the People’s Bank of China, foreign investors held 2.75 trillion yuan ($ 409.5 billion) in Chinese stocks at the end of September, nearly 1 trillion yuan more than a year earlier, thanks to the country’s sustained economic recovery after the pandemic. COVID-19.
The CSI300 Blue Chip Index is up more than 16% since the end of 2019 compared to the rise in S&P 500 by 4.3%.
RMB’s rise, high yields, and inclusion in major global indices have also fueled interest in Chinese government bonds, bringing the total foreign assets of its interbank market bonds to nearly RMB 3 trillion.
China’s majors rallied on Wednesday despite uncertainty over the US presidential election, although the onshore yuan CNY = CFXS reached its weakest level since October 13 as Trump’s chances of winning soared.
Even a month before the elections, amid widespread uncertainty about the outcome, Wall Street’s main institutions engaged actively with China, ignoring the growing geopolitical risks in search of opportunities for long-term growth..
For three consecutive weekends, senior executives from US companies including BlackRock, Goldman Sachs, Fidelity, Warburg Pincus, Bridgewater, and Fidelity International attended a number of high-profile Chinese finance conferences..
Ben Zhou (Ben Zhou), Managing Director of Warburg Pincus in Hong Kong, said tensions between China and the U.S. had little impact on the U.S. company’s strategy or credibility with China..
«Instead, we hope to take advantage of new opportunities because, under the current circumstances, China’s financial system is more open.», – said Zhou.
China fully opened up its giant financial industry this year, lifting restrictions on foreign ownership of futures, brokerage and mutual funds as part of an interim Sino-US trade agreement signed in January.
On October 16, a financial roundtable was held between Chinese officials and Wall Street banks to strengthen relationships and expand cooperation, two people with direct knowledge of the events at the private event said..
Sources said contributors included BlackRock, Vanguard, JPMorgan and Fidelity.
BlackRock and Fidelity plan to establish joint mutual funds in the Middle Kingdom, while US investment banks, including JPMorgan and Goldman Sachs, have gained control of their Chinese brokerage companies..