Foreigners Selling Off... 32 Trillion Won 'Sell China' Since the Beginning of the Year

Foreigners' Net Buying Hits Lowest Since 2015

As global investors continue to exit the Chinese stock market, more than $25 billion (approximately 32 trillion KRW) has flowed out this year alone.

According to major foreign media on the 21st (local time), the net foreign buying volume in the Chinese mainland stock markets (Shanghai, Shenzhen) this year was 54.7 billion yuan (about 10 trillion KRW). Since the selling offensive intensified in August, more than three-quarters (77%) of the foreign funds that flowed into the Chinese stock market this year have exited. This is the lowest annual net foreign buying volume since 2015, the first year the Chinese stock market opened to foreign investors.

Although the Chinese government has introduced a series of stimulus measures across the economy, including consumption, investment, and real estate since mid-August, investors judged that these measures were not strong enough to revive economic vitality. The policy interest rate (LPR) cut fell short of market expectations, increasing volatility in the Chinese stock market. Additionally, when real estate developer Biguiyuan and others faced defaults in August, concerns about an economic crisis arose. Bruce Fang, Chief Economist for China at global real estate services firm JLL, said, "Expectations for government stimulus in the real estate market turned into disappointment, rapidly worsening investor sentiment."

[Image source=Reuters Yonhap News]

The explosive rallies in other major Asian stock markets such as Japan, India, and Taiwan also fueled the 'Sell China' trend. Funds that had been heading to China shifted to major Asian countries. Japan’s Nikkei 225 index, representing the Japanese stock market, surged past the 33,800 level, reaching its highest point in 33 years since the 1990 bubble burst. Taiwan’s benchmark index, the TAIEX, also rose to its highest level in 19 months, driven by expectations for artificial intelligence (AI) semiconductors. On that day, the Nikkei 225 closed at 33,354.14, down 0.10% due to profit-taking after a short-term sharp rise. The Taiwan TAIEX has recorded a 23% increase so far this year. Bloomberg analyzed that "foreign investors have been net buyers of Taiwanese stocks for three consecutive weeks."

Wall Street is predicting a rebound in the Chinese stock market next year. Morgan Stanley expects the CSI 300 index, China’s representative index, to rise by 7.5% over the next 12 months, assuming sufficient economic support measures from Chinese authorities. Goldman Sachs forecasts a 17% increase from current levels. The CSI 300 index, the representative index of the Chinese stock market, has fallen nearly 15% from its high of 4201.35 on January 30 this year (based on the previous day’s closing price).

This content was produced with the assistance of AI translation services.