Over 75% of foreign capital has exited the Chinese stock market.
Haebom
Over 75% of the foreign capital that flowed into China's stock market during the first seven months of 2023 has left the market. This came as global investors sold off more than $25 billion in shares, despite the Chinese government's efforts to restore confidence in the economy.
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Reasons for the outflow of foreign capital: Traders and analysts have pointed out that the lack of robust policy support from Chinese leaders has led institutional investors worldwide to hold off on buying until they see enough recovery in the Chinese market. Worries about a liquidity crisis in the real estate sector and disappointing growth figures have also triggered more selling by foreign investors.
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Inflows and outflows: At the start of 2023, foreign investors snapped up Chinese stocks at record speed, expecting the end of the 'zero Covid' policy and an economic rebound. But in the months that followed, they shifted to heavy selling, and this year's net foreign inflow is expected to be the lowest since 2015.
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Comparison with other countries: This year, foreign capital has flowed into India and Korea by $12.3 billion and $6.4 billion respectively. In contrast, the Chinese stock market has continued to fall, while stock indices in other Asian countries have seen an upward trend.
Throughout 2023, China's stock market has faced a significant exodus of foreign capital. The main drivers have been China's economic policies, troubles in the real estate market, and diminishing expectations for recovery among global investors. Going forward, the performance of the Chinese stock market will likely hinge on whether the government can offer strong economic support and regain the trust of international investors.
Interestingly, Japan is reaping considerable rewards from this. Foreign capital that has left China is now flowing into places like Japan and Indonesia, where investors see stable assets and growth opportunities. I recently visited Tokyo in person, and I could really feel a vibrant, hopeful energy—so different from the 'lost decades' that Japan once experienced.
The funds leaving China are now rapidly spreading to Japan and Southeast Asia, and I think attracting some of that investment into Korea would do a lot to boost our own economy. Although, honestly, we may already be a little late...
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I post articles related to IT 💻, economy 💰, and humanities 🎭.
If you are curious about my thoughts, perspectives or interests, please subscribe.
haebom@kakao.com