China holds most US Treasuries since October, foreigners dump stocks

China holds most US Treasuries since October, foreigners dump stocks

 

NEW YORK,.  China’s holdings of US Treasuries grew for a second month in March to US$1.188 trillion (RM4.705 trillion), its highest level since October, even as overall foreign purchases of Treasuries fell, data from the Treasury Department showed yesterday.

Overseas investors also grew discontent with Wall Street, reducing their US stock exposure by the largest monthly clip in 2-1/2 years.

The increase in China’s US bond ownership may soothe concerns about whether Beijing may pare back its Treasuries stockpile in retaliation against the Trump administration which has sought to slap stiff tariffs and erect barriers against nations it perceives are conducting unfair trade practices.

Japan’s holdings of Treasuries, on the other hand, fell in March to US$1.044 trillion, the lowest since October 2011, data showed.

Back in March, the dollar hit a 16-month low against the yen, making it less attractive for Japanese investors to own dollar-denominated investments, analysts said.

From their peak holdings of Treasuries in November 2014, Japan has now slashed its stake by US$198 billion.

Meanwhile, the amount of Treasuries held in Ireland rose in March to US$317 billion after a record US$13.5 billion fall in February, which stoked speculation whether US multinational companies may be repatriating some money back home in the wake of the massive tax overhaul enacted by Congress in December.

Dublin is a major hub for international fund management and custody businesses, but also reflects Ireland’s hosting of the European centres of US technology and pharmaceutical companies.

While China’s and Ireland’s holdings of Treasuries increased, foreigners overall sold US government securities. Their net sales totalled US$4.92 billion in March, compared with US$43.19 billion in net purchases in February.

Offshore investors unloaded US$23.05 billion in Treasuries in March, their steepest monthly sale since December 2016, while foreign central banks added US$18.39 billion in US government debt on top of the US$19.06 billion they purchased in February, according to the latest Treasury data.

Appetite for agencies, corporates

Foreigners, while less keen on Treasuries, scooped up agency securities and corporate bonds in March.

Their net purchases of agencies totalled US$25.28 billion, the most since July 2016, while they bought US$22.39 billion in corporate debt, the highest monthly increase since November, Treasury data showed.

In contrast, overseas investors sold US$24.15 billion in stocks in March, the biggest monthly outflow since September 2015.

The S&P 500 index fell 2.7 per cent in March, marking its first quarterly loss since the third quarter of 2015 due to worries about a possible trade war, rising interest rates and pricey technology stocks. ? Reuters