Given falling U.S. interest rates, China has been issuing throngs of dollar-denominated debt. However, given that the housing market is not doing too well, many investors are hesitant to enter the Chinese market.

Property investment in China in September grew 10.5% from a year earlier, unchanged from the pace of growth in August. However, property transactions' growth actually slowed relative to normal activity during China's "Golden September," in which home sales usually are at highs.

This is concerning given the exposure to Chinese assets in American portfolios. In fact, developers in Hong Kong and mainland China help make up 41% of the net issuance in Asian dollar-denominated bonds in the ICE Bank of America Merrill Lynch Asian Dollar index this year.

What is more concerning is that investors who have not chosen to take direct exposure to the Chinese sector may still find it has perforated their portfolios, as 14.1% of the same broad Asian Dollar Index is now made up of Chinese and Hong Kong property bonds, an increase from the 11.2% value at the end of 2018.

The problem is lack of funding, which may continue since the capital has ruled against funding for developers. In July, The Chinese Politburo, a top decision-making body of the ruling Communist Party, established a rule by which the property market is explicitly ruled out as a form of short-term stimulus to help stimulate the economy or stimulate growth.

That said, some argue that things aren't as bad as they seem.

"The September figures on property actually were better than expected and showed somewhat of a rebound," said Yan Yuejing, director of the Shanghai-based E-house China Research and Development Institution.

Household loans, including primarily mortgages, rose to 755 billion yuan last month from 653.8 billion yuan in August, central bank data showed.

China's growth overall has slowed to 6% YoY in the third quarter, and if the housing bubble continues, it will exert serious pressure on the economy. Investors should be wary of increasing exposure to this sector, particularly given the U.S.-China Trade war.