Wall Street Puts a ‘Sell’ on Its China Holdings
One of Washington’s biggest China critics traveled to New York in mid-September to meet with some of Wall Street’s best-known financiers. His mission was to persuade them to stop investing in China. Wisconsin Republican Mike Gallagher, who chairs a House committee on China, was surprised to find they didn’t need much coaxing.
They told him they already were ratcheting back their investments there. Their motivation wasn’t China’s human-rights record, but its economic one. In closed-door meetings at the Council on Foreign Relations, the financiers ticked off their concerns: China’s economic slowdown is deepening.
An unprecedented property slump is scaring investors who hold hundreds of billions of dollars of debt issued by Chinese developers. And Chinese leader Xi Jinping’s emphasis on national security has restricted access to data and sparked raids and investigations involving foreign firms assessing investment risks in the country. The amount of money that institutional investors have in Chinese stocks and bonds has declined by more than $31 billion this year, through October, the biggest net outflow since China joined the World Trade Organization in 2001, official Chinese data show.
Hedge funds, including Bridgewater Associates, whose founder Ray Dalio has long been a China bull, have significantly reduced their holdings of Chinese securities. Private-equity firms, including Carlyle, have slashed fundraising targets for their Asia funds or stopped raising China-oriented funds altogether. Mutual-fund managers such as Vanguard and Van Eck Associates have either pulled out or aborted their China plans.
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