Global Funds Abandon China Blue in Selling $9.3 Billion

Global Funds Abandon China Blue in Selling $9.3 Billion

(Bloomberg) — Global investors dumped blue-chip stocks in China in what was a record-breaking sales streak, suggesting the country’s industry leaders are backing away as the rout deepens.

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Foreign investors sold 6.2 billion yuan ($851 million) of Kweichow Moutai between Aug. 7-18, making China’s largest wine maker a best-selling stock through business links with Hong Kong. This was followed by a 4.7 billion yuan per share sale of renewables leader LONGi Green Energy Technology Co. and major lender China Merchants Bank Co.

Outside money has been fleeing the mainland market, offloading the equivalent of $9.3 billion in 12 days of withdrawals through Tuesday, the longest since Bloomberg began tracking the data in 2016. Its departure comes as the housing recession deepens. prolonged exposure to broader risks. Financial contagion, making the country’s stock index among the worst global performers this month with a loss of 7%.

The CSI 300 is now trading near the lowest level since November as the optimism that followed the July Politburo meeting quickly evaporated. Foreigners had moved into the market en masse at the time, only to leave again now in droves as economic data continues to disappoint and stimulus fails to take its toll.

The top 10 stocks sold by foreigners were in the latest trajectory among the top 50 stocks of the CSI 300. Major distillery Wuliangye Yibin Co., Ltd. and Ping An Insurance Group Co., Ltd. 2.9 billion yuan each as of Aug. 18.

Read: Fund managers in emerging markets deepen their short position in Chinese stocks

An analysis by Bloomberg Intelligence also shows that emerging market funds have turned more bearish on Chinese stocks, deepening their average lower position to nearly 100 basis points as of the second quarter from 24 basis points three months ago. They were 40 basis points overweight as of the end of 2022.

The sell-off series shows little sign of slowing down. Foreign funds fell more than 7 billion yuan again as of midday Wednesday. One of the best-performing Chinese hedge funds has blamed global capital for flooding the country’s equities, calling them “a bunch of aimless flies” that stir up market volatility. However, foreign funds own less than 4% of all outstanding A shares, according to a report this month from China International Capital Corp.

– With the assistance of Abhishek Vishnoi.

(Updates with bin position data in sixth paragraph, most recent northbound numbers.)

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