U.S. investors buy a net $25.6 billion of Chinese equities in 2018

Calls for greater U.S. regulation of China-based equities follow a year when investors bought a net $25.6 billion in securities from the country in 2018. The bulk of the stock purchases were of Chinese companies on the more open Hong Kong Stock Exchange and moved counter to global trends in which the U.S. was a net seller of about $44 billion.

The Hang Seng index fell 13.6% during the year as the broader MSCI Emerging Markets index fell 16.6%. The previous year set a 10-year high for U.S. net purchases of Chinese stock at $29.2 billion. Limits on foreign ownership of Chinese companies keep trading volumes of the mainland-based A shares low relative to Hong Kong-listed securities, or H shares. However, the H shares are still subject to Chinese law. The limits on foreign ownership of financial company A shares is set to be lifted in December 2020.

2018 was the first year in the past 10, according to data from the Securities Industry and Financial Markets Association, when the U.S. was a net seller, with Canada buying a net $35.5 billion during the year. Over the prior nine years, the U.S. purchased a net $87.9 billion in foreign equities.