Foreign investors are shunning Chinese stocks and bonds as Beijing's economic headache builds
Liu Liqun/Getty Images
- Foreign investors are shunning Chinese assets as the country's economic recovery falters.
- They offloaded $188 billion worth of stocks and bonds between December 2021 and June 2023, per Bloomberg.
- The outflows come with Beijing battling to shore up a crisis-hit property sector and revive growth.
International investors have started shunning Chinese stocks and bonds, as the world's second-largest economy sputters after three years of zero-COVID lockdowns.
Foreign traders pulled $188 billion from the country's equity and debt markets between December 2021 and June 2023, according to data from Bloomberg – representing a decline of 17%.
The flight from China comes with Beijing facing a number of economic issues, including weaker-than-expected growth, a slumping renminbi, and a property market that's spend the past two years lurching from one crisis to another.
International investment has also likely dried up due to the hardline policies of President Xi Jinping, whose third term in office has coincided with bans for US semiconductor companies like Micron and a regulatory crackdown that's wiped an estimated $1.1 trillion off the market value of local Big Tech companies.
"Avoid[ing] China" has become one of investors' main priorities this year as a result of those issues, according to a recent survey by Bank of America.
Just 15% of the top fund managers polled by the bank expect Beijing to roll out a "bazooka" stimulus package that would revive the economy and give stocks and bonds a much-needed boost, a team of strategists led by Michael Hartnett wrote in a research note last week.
China's flagship stock-market index, the CSI 300, has suffered in the face of the exodus, slumping 23% since the start of 2022. The US's benchmark, the S&P 500, is down just 5% over the same period.
Meanwhile, fixed-income investors have also started to ditch Chinese government bonds en masse – pulling around $26 billion from the asset class so far this year, per Bloomberg.