According to the Financial Times, foreign capital has withdrawn more than $12 billion from Chinese stocks since June, and 2024 may be the first year of net stock market outflows. Beijing has restricted key data on foreign investment as global funds continue to withdraw from Chinese stocks, putting 2024 on track to be the first year of net outflows for the entire year. There are concerns that this move may further weaken market confidence.
Data on foreign capital inflows are restricted and information transparency decreases
Starting Monday, daily capital flow data showing foreign capital entering the Chinese mainland stock market through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect will cease to be made public, and foreign shareholdings will be released quarterly instead. The move comes as international investors have pulled more than $12 billion from Chinese stocks since June, turning flows into negative for the year. According to data from the Hong Kong Exchange, previous capital inflows were mostly driven by overseas branches of state-owned institutions. As divestments intensified, capital outflows became a reality during the year. Since the launch of Shanghai-Hong Kong Stock Connect in 2014, China’s stock market has never seen a full-year net outflow.
Decreased transparency may affect foreign investment confidence
Gary Ng, senior economist at Natixis, said: "While data provided by global exchanges vary, reduced transparency is not conducive to attracting foreign investment, especially in emerging markets. Investors may question why these data are no longer provided and update It is difficult to make investment decisions to enter the Chinese market. "Beijing is working hard to stabilize market confidence in the face of China's slowing economic growth and the continuing impact of the real estate market crisis.
Back in May, Chinese regulators stopped providing real-time data on foreign transactions.
Stock market performance is weak, investor confidence dampened
China's CSI 300 index is down 1% since the start of the year, while in stark contrast, the U.S. S&P 500 is up 17% and India's Nifty 50 is also up 13%. China's stock market has been weak since its rebound in February, with lower market liquidity and lower trading volumes further affecting investor sentiment. Chinese authorities have repeatedly restricted data release in the past to avoid negative interpretations. Last year, regulators stopped some fund companies from displaying estimates of fund net worth and stopped publishing data on record youth unemployment. In addition, the authorities also used Window Guidance to instruct some domestic financial institutions not to net sell stocks on specific days to support the market.
Foreign capital adjusts its strategies and the Chinese market becomes less attractive
As risks rise, foreign capital has become more cautious in operating in the Chinese market. Jason Lui, head of Asia-Pacific equity and derivatives strategy at BNP Paribas, said: "In the past two or three years, foreign investors have become more tactical in their deployment of the Chinese mainland market." He added that although investors are optimistic about emerging markets such as India, Vietnam's More and more funds are excluding China and instead investing based on the "emerging markets excluding China" basis.
Lui also noted that if current trends continue, China's A-share market could see net outflows for the first time in a full year. However, he also emphasized that if China introduces major policy measures, investors may return to the market. This series of data restrictions reflects the defensive posture adopted by the Chinese authorities in the face of economic pressure. However, it may also further weaken the outside world's confidence in the Chinese market.
This article covers foreign investment data! Beijing restricts trading data, foreign capital accelerates withdrawal from Chinese stock market appeared first on Chain News ABMedia.