Foreign Investors Dump Chinese Stocks Despite Reopening

Foreign investors are scaling back their purchases of Chinese stocks as hopes for a reopening rally in the world's second-biggest economy give way to concerns about falling cargo shipments and lackluster sales of homes and cars.

Photo Insert: The Hang Seng index ticker at Exchange Square in Hong Kong

"The initial reopening sort of frenzy is mostly behind us now," said one banking official, Nikkei Asia reported.

Global funds have cut their holdings to lowest level since December 2020, it added, with experts at Deutsche Bank predicting the outflow will continue in the first semester of this year.

Bloomberg News also reported that overseas funds returned to selling China’s bonds in January after a one-month pause, underscoring the relatively unattractive yields on yuan-denominated debt as Beijing keeps monetary policy loose to support growth.

Foreign holdings of Chinese onshore bonds in the interbank market including sovereigns, policy bank debt and other fixed-income securities slid by 106.5 billion yuan ($15.5 billion) to 3.28 trillion yuan, the lowest since 2020, according to Bloomberg calculations based on data from the China Central Depository & Clearing Co. and Shanghai Clearing House. That’s also the biggest outflow since May.

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