Chinese investment funds are quietly entering the U.S. stock market, increasing their holdings of U.S. companies as diversification from the volatility of their own markets.
Evidently, Chinese funds still see better prospects in the U.S. than elsewhere in the world.
"The trend of 'going out' is unstoppable, and the demand will eventually come for funds investing overseas," Alick Lei, head of China Client Trading at UBS Asia Equities, told The Wall Street Journal.
"These funds will open the gates for cash-rich Chinese investors to go out and gain exposure to overseas markets."
Though it’s opening visibly, the path to overseas investing for the Chinese is still tightly controlled.
The Chinese government must bestow the designation of Qualified Domestic Institutional Investor before a fund is permitted to invest overseas, and quotas decided by the government determine how much money each fund can invest.
Global Cyclical Industries Large Cap Equity is investing in the United States, Japan and Australia. China Opportunities Fund and China AMC Global Equity Select Fund are making U.S. investments a bigger part of their portfolios.
Guotai Asset Management has started the first fund in China to track a U.S. stock index: The Guotai NASDAQ-100 Index Fund is open to Chinese investors and has $81 million in assets.
MarketWatch reports that respondents to HSBC’s International Business Survey indicated the most attractive countries for U.S. companies to do business with currently are Canada and the United Kingdom, which surpassed some of America's largest trading partners, including China, Germany and Japan.
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