Source:
https://scmp.com/business/markets/article/3012649/foreign-investors-accelerate-selling-china-equities-may-net-us78 Markets
Foreign investors accelerate selling of China equities in May, as net US$7.8 billion exits via stock connect
- Figures show 53.7 billion yuan (US$7.78 billion) worth of Chinese equities were sold during May via the stock connect, almost three times the outflow in April
A man watches a display in green to mark falling stock prices at a brokerage house in Shanghai on May 6, 2019. The CSI 300, the benchmark that tracks blue chips listed in Shenzhen and Shanghai, was down 7.24 per cent in May. Photo: AP
Foreign investors accelerated their exit from mainland equities during May, reflecting the largest single month of selling through exchange links since December 2016, amid growing pessimism towards equities as trade tensions between China and the US continue to escalate.
A total of 53.7 billion yuan (US$7.78 billion) worth of Chinese equities were sold in May, almost three times the outflow in April, according to Bloomberg data. This marks the greatest monthly outflow by overseas investors since December 2016, when the Shenzhen-Hong Kong Stock Connect started. The Shanghai-Hong Kong Stock Connect was established in November 2014.
The stock connects offers foreign investors a pathway to China’s equity markets via Hong Kong.
Overseas investors started to pull funds out of Chinese equities in April, reflecting the first net outflow of funds since October last year after the US imposed tariffs on US$200 billion in Chinese products, and Beijing responded by targeting US$60 billion in US goods.
April figures show a net 18 billion yuan worth of outflows from mainland equities via the stock connects. Outflows accelerated in May as the trade war escalated and hopes of an impending deal between the world’s two largest economies faded.
“Due to the uncertainty over the China-US trade relationship, investors have become more pessimistic on China’s stock market,” said Castor Pang Wai-sun, head of research for Core Pacific-Yamaichi. “Foreign investors are more rational than Chinese investors and they don’t believe the government can maintain the A-share market at the current level. They are selling A-shares and running away,”
May also marked the second straight month of losses for the Shanghai Composite Index, which fell 5.84 per cent. The CSI 300, which tracks companies listed in Shanghai and Shenzhen, shed 7.24 per cent during May, marking its first month of losses this year.
China’s largest liquor maker, Kweichow Moutai, was the most actively traded stock on the Shanghai connect during the month. The company’s shares shed 8.62 per cent during May, its first month of losses since October.