(Bloomberg) – Foreign investors withdrew $8.8 billion from Chinese financial markets last month as stocks tumbled, according to estimates from the Institute of International Finance.
Outflows from the Chinese stock market reached $7.6 billion while $1.2 billion was withdrawn from bond markets, according to estimates. That was more than in September, when a combined $2.1 billion in foreign portfolio investment left.
The estimates confirm local exchange data showing how unpopular onshore financial instruments have become with foreign investors as Covid Zero checks and a housing crisis hurt the economy and geopolitical concerns also undermine sentiment. Equity outflows have continued so far this month despite a strong rebound from the historic rout in October.
“The shift to exits in 2022 is notable and reflects much discussion in the asset management community,” IIF economist Jonathan Fortun wrote in a statement. “This change reflects geopolitical concerns and concern that the government’s zero Covid policy may weigh on China in the medium term.”
Elsewhere, emerging markets outside China saw $9.3 billion in equity inflows and $8.7 billion in debt, according to the IIF. Foreign funds bought more than $2.5 billion worth of stocks in the region’s emerging markets, including India, South Korea and Thailand, last week, the most since mid-August, according to the latest available stock market data compiled by Bloomberg. These data exclude China.
“We see that appetite for local currency bonds in the emerging market complex continues to weaken, which is also contributing to a weaker outlook,” according to Fortun. “Continued market volatility (both for stocks and yields) poses a risk to the outlook.”
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