Foreign investors are sharply reducing their exposure to China’s stock market amid concerns about the country’s economy under President Xi Jinping and fears of a housing market collapse, Markets Insider reports.
After peaking at 235 billion yuan in August, net foreign investment in Chinese stocks has fallen 87 percent this year to just 30.7 billion yuan, according to a Financial Times analysis based on official data.
That means foreign investors have pulled about $29 billion from China’s stock market, with the outflow largely fueled by concerns about China’s economy, which continues to struggle after draconian lockdown measures imposed during the COVID-19 pandemic, a struggling real estate sector and a slump in consumer spending. demand, which led to deflation.
In the absence of spectacular developments in the coming days, the Chinese stock market will end the year with the lowest level of foreign investment since 2015.
Foreign investors are alarmed by problems in China’s real estate sector
A key turning point for investors came in August, when one of China’s biggest developers, Country Garden, announced for the first time that it would default on bond payments it had issued and warned it was at risk of defaulting.
Since then, China’s stock market has seen a net sell-off by foreign investors amid concerns that problems in the housing sector could spread to other markets.
The Financial Times’ new analysis of the outflow of foreigners from China’s stock market comes after official data released by Beijing authorities in early November showed China posted its first quarterly deficit in foreign direct investment (FDI), pointing to Beijing’s struggles with the involvement of companies from abroad.
China has never recorded a deficit in foreign direct investment since it began publishing data on this indicator in 1998.
Analysts attribute this situation in part to the “de-risking” strategy that more and more Western governments are adopting toward Beijing amid rising geopolitical tensions.
In addition, foreign currency outflows from China rose significantly in September to $75 billion, the highest single-month level since 2016.
Source: Hot News
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