China Faces Consistent Outflows of Foreign Investments Even In April
China–After selling $7.1 billion worth of Chinese shares in March, overseas stockholders have decided to sell a net $1.01 billion value of Chinese stocks so far this month through Hong Kong’s stock-connect program.
As a result of restrictive COVID lockdowns in Shanghai and many other major cities, the SSEC and.CSI300 have plummeted roughly 5% thus far in April. China’s large and mid-cap equities have lost roughly 20% in 2022, currently the second worst performer in the world after Russia.
Despite various hurdles, China’s top securities regulator stated on 21st April that the economy remained stable. They want institutional investors to put more money into stocks to help prevent short-term market swings while also helping to restructure the economy.
The Chinese equities market valuation has now returned to the troughs seen in March 2020, when COVID began, and December 2018, when US-China tensions were at an all-time high.
Bond investors stayed away owing to a rise in US government yields, which has diminished the premium on Chinese debt, as well as a rapid decline in the yuan CNY=CFXS CNY. Foreign investors sold $17.7 billion in Chinese bonds using Hong Kong’s Bond Connect last month, the largest outflow ever since last August 2017.
Chinese bond holdings by foreign investors fell to their lowest level in five months in March at $3.57 billion. Duncan Tan, DBS Bank strategist said, “Global bond investors will likely consider the outperformance potential of CGBs to be much smaller going forward.”