The V(accine) Shaped narrative continues to be in play this year, and China's financial markets are drawing record chunks of global capital - particularly from U.S. investors. This is poised to keep growing.
As more money flows to China's financial markets, this allows political leaders to increase the country's political power. Thus, giving China another weapon to challenge the US's position as the world's superpower. According to the Director of China Research at Seafarer Capital Partners, China's goal is to internationalize the Renminbi. Currently, as more outside investors invest in mainland Chinese companies, government bonds, and other securities that trade in the Chinese renminbi, they will be forced to buy and hold the currency.
The more global investors hold Chinese securities, the more international and important China's currency becomes. As of 2020, the market capitalization of Chinese companies listed on the mainland, Hong Kong, and overseas indexes like the New York, London, and Singapore stock exchanges totaled nearly $17 trillion, of which $11.7 trillion of the total originates from the mainland exchanges. Although former U.S. President Donald Trump banned U.S. investors from holding shares of certain Chinese companies, China has still become one of the largest single-country exposures for U.S. Investors. It's becoming increasingly clear that many investors see the potential in a rapidly growing Chinese economy and more importantly, China's growing dominance as the world's next superpower. Part of China's 14th 5-Year plan includes the development of a digital currency (China's central bank is currently partnered with SWIFT on this), additionally, many Chinese firms have now elected to primary and secondary listings on the mainland & Hong Kong securities markets; both of which could speed up the internationalization of China's currency and increase the country's geopolitical influence around the world.
While the U.S. is still the No.1 spot for a well-capitalized and liquid market, China is on pace to catch up. Therefore, it would be wrong not to shift our focuses on the mainland (and HK) markets in search for new gems and opportunities.
Sources: Axios Markets, Seafarer Capital Research
As more money flows to China's financial markets, this allows political leaders to increase the country's political power. Thus, giving China another weapon to challenge the US's position as the world's superpower. According to the Director of China Research at Seafarer Capital Partners, China's goal is to internationalize the Renminbi. Currently, as more outside investors invest in mainland Chinese companies, government bonds, and other securities that trade in the Chinese renminbi, they will be forced to buy and hold the currency.
The more global investors hold Chinese securities, the more international and important China's currency becomes. As of 2020, the market capitalization of Chinese companies listed on the mainland, Hong Kong, and overseas indexes like the New York, London, and Singapore stock exchanges totaled nearly $17 trillion, of which $11.7 trillion of the total originates from the mainland exchanges. Although former U.S. President Donald Trump banned U.S. investors from holding shares of certain Chinese companies, China has still become one of the largest single-country exposures for U.S. Investors. It's becoming increasingly clear that many investors see the potential in a rapidly growing Chinese economy and more importantly, China's growing dominance as the world's next superpower. Part of China's 14th 5-Year plan includes the development of a digital currency (China's central bank is currently partnered with SWIFT on this), additionally, many Chinese firms have now elected to primary and secondary listings on the mainland & Hong Kong securities markets; both of which could speed up the internationalization of China's currency and increase the country's geopolitical influence around the world.
While the U.S. is still the No.1 spot for a well-capitalized and liquid market, China is on pace to catch up. Therefore, it would be wrong not to shift our focuses on the mainland (and HK) markets in search for new gems and opportunities.
Sources: Axios Markets, Seafarer Capital Research