China hit with US$3.4 billion equities outflow as wary investors eye other emerging markets
- Overseas investors are continuing to sell their Chinese equities, a show of weakened confidence even as other emerging markets saw notable inflows
- Geopolitical risk cited as cause by financial trade group in monthly tracker of capital movements
Foreign investors continued to pull out from China’s capital markets, jettisoning a bundle of stocks and bonds worth US$3.2 billion in December even as wider emerging market securities attracted inflows.
Chinese equities suffered a US$3.4 billion outflow from non-resident portfolios in the last month of 2023, while Chinese bonds only had a marginal US$189 million inflow for the same month, according to preliminary data from the Institute of International Finance (IIF) released on Thursday.
In November, Chinese stocks saw inflows of US$191 million but overseas investors offloaded a total of US$4.31 billion worth of Chinese bonds.
This confirms the bifurcation between China and other emerging markets
Emerging markets securities overall had a net inflow of US$29 billion for the second consecutive month, the US-based trade group for the global financial services industry said in its monthly Capital Flows Tracker for December 2023.
While Chinese stocks and bonds have continued to underperform, other emerging market securities are firming up their recovery, the IIF said in its report.
“This confirms the bifurcation between China and other emerging markets, suggesting a change in sentiment from investors,” it added.