16:06 - 27.08.2024

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August 27, Fineko/abc.az. Chinese companies are gearing up for a potential sale of dollar assets worth a staggering $1 trillion, according toStephen Jen, head of Eurizon SLJ Capital.

If this massive selloff materializes, experts predict the yuan could strengthen by approximately 10%.

ABC.AZ reports, citing ProFinance, that Jen believes the currency represents the most apparent risk factor at the moment, and given the market's failure to adequately price it in, the yuan may have plenty of surprises in store. Since the onset of the pandemic, Chinese companies have amassed over $2 trillion in offshore investments, allocated to assets yielding higher returns than yuan-denominated assets.

When the Federal Reserve lowers interest rates, the appeal of dollar assets will diminish. The interest rate differential between China and the United States is expected to persist, potentially triggering a conservative estimate of $1 trillion to flow back to China.