In January, foreign investors sold $2 billion worth of net shares in mainland China. Nikkei Asia writes about this with reference to the Wind data provider, UNN reports.
Details
According to Wind, January also marked the sixth consecutive monthly outflow since August 2023. This trend is considered to be the "strongest" and "longest" since the opening of the Stock Connect trade link between Hong Kong and the mainland in 2014.
In January, Beijing took measures to support the market. In particular, the Chinese central bank reduced the bank reserve ratio to increase liquidity. Over the weekend, China's securities regulator announced that it was suspending short-selling of shares through exchanges, a rare public move as such instructions are usually given verbally to securities companies by the authorities. This week, the authorities further eased the conditions for buying real estate in Shanghai.
The publication quotes Hong Kong-based equity strategy manager Wenchang Ma, who notes very weak foreign sentiment towards China. According to her, geopolitical risks could cause market volatility in addition to the operational momentum of companies on the ground, which could lead to "downside risks" to the market consensus for Chinese companies' earnings growth of 15% in 2024.
Context
China and Hong Kong are currently the worst and third worst performers in Asia in dollar terms, with losses of 10.9% and 9.8%, respectively, Goldman Sachs reported on Wednesday. The South Korean market ranks second.
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