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Coronavirus pandemic and US government pressure on investors to avoid China drag capital flows to nine-year low

  • Investment between the two countries fell to US$10.9 billion between January and June, the lowest level for a six-month stretch since late 2011, study shows
  • US investors already exposed to China hold firm, while some new investors exploring opportunities turn cautious, panel of investors says

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A Yale University student is seen on campus in New Haven, Connecticut. Photo: AFP
Alison Tudor-Ackroyd

The US government’s pressure on investors to turn away from China, combined with the travel barriers thrown up by the coronavirus pandemic, have sunk cross-border money flows to a nine-year low, according to a consultant’s study and senior money managers.

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The Trump administration has been actively discouraging US institutional investors from buying mainland Chinese stocks and bonds this year while the coronavirus pandemic has made travelling internationally to scout out new investment opportunities troublesome.

“People who were beginning to dip their toe into Chinese private markets are now pausing,” said Edward Grefenstette, CEO and chief investment officer at the Pittsburgh-headquartered Dietrich Foundation, which manages about US$1.1 billion.

A divide is opening between old China hands, who are talking about continuing to plough capital into the world’s second-largest economy, and new investors to the market. “There is a bifurcation,” said Grefenstette during a conference on Thursday.
The coronavirus pandemic has pushed foreign firms and governments to reconsider their future with China, according to a report published this month by New York-headquartered consultancy Rhodium Group.
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