In the ongoing trade showdown between the Americans and Chinese, the westerners are trying to dominate the Asians, at least in the financial battlegrounds.
Treasuries have kept rising this year, the dollar remains strong following three reductions in interest rates, and US shares have set a series of milestones. On the other hand, Chinese shares, the yuan and government bonds of the country have been struggling to find momentum recently.
In recent months, the outperformance has been particularly notable, with the S&P 500, Index trading on multiple highs compared to the Shanghai Composite Index.
It highlights the diverging forces fanning sentiment in the financial markets of both countries: the dovish tilt of the Federal Reserve last year in the U.S., whose economy has held up better than expected, has supported risk sentiment.
In China, despite a string of disappointing economic data, the central bank has stuck to its prudent approach to stimulus. Growth has been consistently laggard since at least the beginning of the 1990s.
"The US stock market has been very strong, while the momentum saw at the beginning of the year in Chinese stocks has waned somewhat," said Gerry Alfonso, executive director of the International Business Department at Shenwan Hongyuan Group Company.
China's slowdown has affected investor sentiment even more than developments on the trade front, market observers said. But that the relationship has evaporated, with the S&P 500 climbing 7 percent since June 30, while the Shanghai Composite has lost 3 percent.
Hyde Chen, an equity strategist with UBS Wealth Management in Hong Kong, said: "Global investors see a trade war leading to greater investment risk in China."
U.S. stocks fared better as Asia's economy as a whole is more impacted by trade effects, analysts said, adding that investors requested the most payment for owning Chinese sovereign bonds relative to the US.
The gap between the 10-year bond yields of the countries increased in October to 1.6 percentage points, as supply issues stopped China's bonds from entering a global debt rally.
This year, the ICE US Dollar Index has risen more than 2 percent while the yuan has been struggling, weakening for the first time since 2008 beyond 7 per dollar in August.
Meanwhile, falling transaction volumes suggest that yuan investors tend to stay on the sidelines for now, as a US legislation that backs protests in Hong Kong seeks to mess with a phase one trade deal.
