Foreign investors net sell 13 trillion won in Chinese stocks

Signs of the Chinese real estate-triggered economic crisis are accelerating the “China exodus,” with foreign investors withdrawing more than 13 trillion won from the stock market this month alone.

On Friday, Nikkei Asia, a Japanese media outlet, reported that foreign investors net sold a total of 76.1 billion yuan (about 13 trillion won) in the Chinese stock market until the 24th of this month. This is the highest monthly net sale since 2014. The media explained that foreign investors who mainly hold stocks with high market capitalization can greatly impact the stock market.

The Bloomberg News also reported that foreign investors net sold stocks on a Chinese exchange in mainland China for 13 consecutive trading days until Wednesday. It was the longest record since Bloomberg compiled related statistics in 2016, and the net sales reached 10.7 billion U.S. dollars.

The pessimism that had been centered around real estate stocks spread to the electric vehicle industry. Shares of BYD, China's No. 1 electric vehicle maker, have fallen about 20 percent this month. Nikkei Asia reported that foreign investors met with exacerbated concerns after an economic meeting chaired by Chinese President Xi Jinping last month failed to devise measures to stabilize the economy.

Bloomberg reported that the China Securities Regulatory Commission (CSRC) urged pension funds/some large bank and insurance company executives to further promote their investment at a seminar on Wednesday. In return, participants responded that they would help stabilize the stock market and nurture the national economy.

Despite the Chinese government's efforts to revitalize the stock market and stimulate the economy, global investment banks (IBs) have recently lowered their forecasts for China's economic growth rate, projecting that China's exodus will continue for the time being.


clearlee@donga.com