Earlier today Eamonn brought us the story of the link up between Shanghai and Hong Kong stock markets, so what does that potentially mean for investment flows.
According to a follow up article from Bloomberg, US fund managers are said to be fighting over themselves to get a slice of the $9tn Chinese stocks and bonds market.
Firms such as Blackrock have registered nearly 40 ETF’s with US securities regulators to give any US investors a direct line into China. That’s 6 times the number currently registered. As China opens up there’s a big sense of not wanting to be left out.
Is the excitement justified? Average AA rated 90 day due debt in China yields around 4.31% compared to non-fin commercial US paper of similar ratings at around 0.09%.
With many big money managers continuing to ratchet down return forecasts into single figures they will be looking at every opportunity to boost those numbers even if it means taking a riskier route.
While many still see the end of Fed QE causing a reaction in emerging markets news like this will go to underpin those in the Asia region.
There’s many hoops to jump through before the money starts leaving US (and others) shores and heads to China but it’s a heads up on what could be a very big move.
Full story from Bloomers here
