By Ankur Banerjee
Singapore (Reuters) – Since China and the American battle for rates, locked up in a struggle that could lead to a deal or a trade war between the two largest economies in the world, staying away from China’s stock market will be the standard option for foreign investors.
The Chinese stock market, which is already faltering of investors about where the economy is going and disappointment about Beijing’s efforts to stimulate growth, returned from a week -long break with a muted response to the trade conflict.
While the 10% American rates were imposed on Tuesday, President Donald Trump’s campaign threats were far behind, and the Tit-for-Tat measures of China were seen as a modest, analysts said fear than in Trump’s first tenure.
Conflicting reports on Wednesday about whether and when Trump and Chinese President Xi Jinping would talk and go a sudden stop about the US who accepted post packages from China – who blinded e -commerce shares – emphasized the pitfalls that investors want to avoid.
“I will now follow the more safe approach and not fight the rates,” says Francis Tan, main strategist for Asia in Ca-Indosuez, who advises his clients to run in bonds, because they offer a good buffer to the downward To complete the shares.
“The level of uncertainty has increased because, although they show their hands, no one knows whether the actual trade war game has started or when it will come.”
Global investors were already wary about China’s growth prospects for concern about the long -term crisis of ownership, the deflatory pressure and the lack of follow -up to the promises of Beijing on Stimulans.
In the past three months, foreign investors have achieved nearly $ 12 billion from China-oriented funds, according to LSEG Lipper data, anything but the inflow of $ 13 billion reversed.
The lumpy streams indicate taking a profit and a lack of sticky capital that continues to flow to China for the long term.
“I think many people say that China is waiting for Trump and that they will have all this kind of stimulus to roll out. I don’t really believe that” Janus Henderson.
“We don’t really want to add anything to China because we seem to have it right right now … Adding something else should probably mean much more risk.”
Trade war
Relatively muted price movements also indicate a market that is scrapping for trade conflicts and not willing to gamble on the outcome, which analysts say it will be more complicated to find out than Trump’s deals with Mexico and Canada.