China ratchets up US securities sell-off

Beijing’s holdings of US Treasuries dropped to their lowest level since 2009

The amount of US stocks and bonds sold by Chinese investors hit a four-year high in August, according to the latest data released by the US Treasury Department on Thursday.

Sales of equities totaled about $5.1 billion, marking a record for monthly sales of US stocks by investors from the Asian nation, while they also sold agency bonds.

Data showed that China's holdings of US Treasuries fell to $805.4 billion, hitting the lowest level since May 2009, when Beijing held $776.4 billion in US debt.

The surge in sales of US securities has fueled speculation that Beijing could have used the funds for intervention purposes to support the weakening national currency.

In August, the yuan dropped to its lowest exchange rate against the US dollar since November, prompting Beijing to instruct state-owned banks to step up intervention in the currency market.

“It's unclear whether this was for currency purposes because Chinese reserves have not declined, which is odd,” Gennadiy Goldberg, head of US rates strategy at TD Securities in New York said, as quoted by Reuters.

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“It's really difficult to tell why their holdings are declining so much, but it could certainly be to stabilize the currency.”

Total holdings of US Treasuries by foreign countries amounted to $7.707 trillion in August, marking year-on-year growth of roughly 2.8%.

Japan remained the largest foreign holder of US government debt at $1.116 trillion.

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