Foreign investors sell China shares at record pace in August


Share post:

Receive free Chinese business & finance updates

Foreign investors sold a record $12bn worth of Chinese stocks in August as piecemeal support measures from Beijing failed to assuage concerns over slowing growth in the world’s second-largest economy and a worsening crisis in the country’s property sector.

The unprecedented outflows come as figures on Thursday showed China’s manufacturing sector contracted for a fifth consecutive month, despite pledges from leaders in late July to deliver more substantial support measures for the vital property sector, which is typically responsible for about a quarter of annual economic activity.

Simmering tensions with Washington have also dimmed western investors’ appetite for Chinese assets, with US commerce secretary Gina Raimondo warning that American companies were starting to see China as “uninvestable” during a four-day visit to the country this week.

Calculations by the Financial Times based on exchange data show net sales of almost Rmb90bn ($12.4bn) worth of Shanghai- and Shenzhen-listed shares by offshore traders in August, more than any month since the programme launched in late 2014.

Asset managers and analysts said the surge in sales reflected disappointment from global investors, whose focus has shifted this year from hopes for a broad stimulus to a more targeted bailout for property developers. But Chinese leaders have so far remained reluctant to launch such a rescue.

“Investors are quite worried about GDP and whether [policymakers] can even hit that 5 per cent growth target,” said Stephen Innes, managing partner at SPI Asset Management. “That’s directly attributable to the property market because the hit to GDP from that could be 1 percentage point or more.”

Innes added that investors were also wary of “high-level political risk” as the outlook for US-China relations remained dim despite describing Raimondo’s visit as “positive”.

Concerns over the outlook for the country’s real estate market have worsened this month as private Chinese developer Country Garden, once considered among those least likely to default, missed payments on international bonds and sought to push back on renminbi repayment obligations coming due next week.

Meanwhile, shares in China Evergrande, the developer whose defaults on dollar bonds two years ago marked the start of the sector’s liquidity crisis, resumed trading in Hong Kong this week for the first time in 17 months and immediately fell almost 90 per cent.

“The word ‘stimulus’ has been misused too many times and now nobody expects a big bang on the fiscal front anymore,” said Alicia García-Herrero, chief Asia-Pacific economist at Natixis. “Now investors’ clients are focused on the real estate sector policy — that’s the new mantra.”

García-Herrero said there had been a handful of property policy changes over the past month, including the easing of mortgage conditions for first-time buyers in the megacities of Guangzhou and Shenzhen. But these amounted to “tiny bits, not the big bang [that would cause] equity inflows from foreign investors”.

The economic slowdown has weighed heavily on broader valuations of Chinese stocks, dragging the benchmark CSI 300 index down 8 per cent in dollar terms in the year to date even as big markets elsewhere in the world have notched double-digit gains.

Efforts to prop up shares through cuts to trading fees and other measures, which delivered substantial gains when previously deployed, have likewise failed to provide a lasting boost to investor sentiment.

“You need substantial stimulus to get people back in,” said García-Herrero, before adding: “Don’t hold your breath.”

Additional reporting by Andy Lin in Hong Kong

Source link

Lisa Holden
Lisa Holden
Lisa Holden is a news writer for LinkDaddy News. She writes health, sport, tech, and more. Some of her favorite topics include the latest trends in fitness and wellness, the best ways to use technology to improve your life, and the latest developments in medical research.

Recent posts

Related articles

Jeremy Hunt’s risky ‘carrot and stick’ policies could help revive Tory fortunes

Receive free Conservative Party UK updatesWe’ll send you a myFT Daily Digest email rounding up the latest...

‘Last mile’ of disinflation the hardest, warns ECB deputy head

Receive free Eurozone inflation updatesWe’ll send you a myFT Daily Digest email rounding up the latest Eurozone...

Spotify boss urges UK to enact tougher regulation of tech gatekeepers

Receive free Daniel Ek updatesWe’ll send you a myFT Daily Digest email rounding up the latest Daniel...

Sam Bankman-Fried prepares for the fight of his life in US trial

A year ago, 30-year-old billionaire Sam Bankman-Fried posted a 14-tweet thread on the balance of “safety vs...

UAE proposes to host UN climate summit for second year as Russia blocks talks

Receive free Climate change updatesWe’ll send you a myFT Daily Digest email rounding up the latest Climate...

Bills set to soar as water companies seek record £96bn spending

Receive free Utilities updatesWe’ll send you a myFT Daily Digest email rounding up the latest Utilities news...

Japan’s prime minister Kishida says: ‘reassess our economy’

Throughout September, in Tokyo, New York, Hong Kong and London, the world’s biggest investment banks hosted a...

Hunt to pledge minimum wage rise and benefit sanctions

Receive free Conservative Party UK updatesWe’ll send you a myFT Daily Digest email rounding up the latest...