With the state of growth in the Chinese economy under increasing scrutiny, and the Chinese stock market largely distrusted by local citizens, more and more investors from China are directing their money into the US stock market.
In light of the Chinese stock market ‘bubble’ that burst last year, nearly 500,000 Chinese investors have sought to diversify their risk exposure by investing in less volatile investments – namely, US equities. This trend is showing no sign of slowing, with companies competing to provide remote access for an anticipated 200,000 additional investors by the end of 2016 – and with account set up now easily accessible for many Chinese investors (often affluent or high status people), there is every chance this number could be exceeded as expectations for larger returns grow.
More recently, one only needs to look at the purchase of the Chicago Stock Exchange by a Chinese investor group (Chongqing Casin Enterprise Group) to demonstrate how much the appetite for overseas investments has grown among Chinese investors. Not only is this the first time a Chinese organization has bought a US bourse but it provides the group a very lucrative opportunity for growth through a longstanding company, while also setting the scene for further Chinese companies to follow in the footsteps of Baidu and Alibaba by listing in the US.
Meanwhile, as forex regulations are relaxed and Chinese businesses surpass $70 billion in foreign investments and acquisitions for 2016, the result is a significant increase in capital flowing into the US and supporting the market from collapsing. Whether this is the start of the next stock market ‘bubble’ however, remains to be seen.