Amid ongoing economic difficulties, global investors withdrew $1.1 billion from Chinese onshore equities in the first half of 2024.
In the first two weeks of this year, foreign investors sold $1.1 billion worth of onshore shares, indicating their growing pessimism about Chinese markets. When China’s central bank maintained the benchmark borrowing rate constant on Monday, investors were even more disappointed.
Bloomberg reports that in the first two weeks of 2024, international investment funds sold 7.9 billion yuan ($1.1 billion) worth of Chinese equities, reflecting negative sentiment among investors due to the slow economic recovery.
Even though Chinese stocks attracted massive investments from outside in the last week of 2023, they have had their worst start to a year since 2019. Stocks have fallen to levels not seen in almost five years due to this collapse.
The sale occurred after a record-low yearly purchase of onshore Chinese shares by foreign investors last year. Consequently, the market is expected to see outflows for the sixth month in a row.
Since September, consumer stocks on the MSCI China Index have lagged behind, placing them second to last, behind real estate. Companies included in these consumer indices have seen a decline of almost $157 billion in their combined market value.
After China’s central bank opted to hold a key interest rate steady on Monday, investors were even more negative about Chinese onshore equities. This decision was made in response to worries about the volatility of the yuan and the remote chance of policy easing by the Federal Reserve. Investors were anticipating a rate decrease announcement from the People’s Bank of China, the first since August.
Despite the central bank pumping more money into the system to meet financing needs, Friday’s persistently poor credit data raised expectations for additional punitive measures.
According to Robert Carnell, regional head of research for Asia Pacific at ING Groep NV, “a cut would probably have undermined the yuan and led to unwanted currency weakness,” given the bad statistics.
“I am neither shocked nor disappointed, but I have accepted that this will be another challenging year since I believe the authorities are limited in what they can do.”
According to the numbers that were announced on Friday, China’s deflationary spell in December was the longest since 2009. A month’s worth of financing and loan growth missed estimates, while exports declined for the first time in a year since 2016.
Despite setting an ambitious growth target for this year, President Xi Jinping’s administration is facing obstacles such as poor domestic demand, a protracted property crisis, and a slow employment market.
On Wednesday, investors will get a better picture of China’s economic health thanks to the announcement of the country’s fourth quarter gross domestic data. The data for Q3 exceeded goals, thanks to increased consumer spending and a robust retail sector.
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