Foreigners snap up Chinese equities, cut debt in anticipation of emerging market rebound

Name: Excitement and anxiety as China starts to reopen after zero-Covid
Uploaded: 2022-12-09T05:00:08.000Z
Duration: 4 min 41 s
Description: Excitement and anxiety as China starts to reopen after zero-Covid

China’s debt market lost US$3.1 billion in November, compared with ‘impressive’ gains of US$17.5 billion in other emerging markets

China’s stock market witnessed US$8.5 billion in foreign inflows, while other emerging markets saw US$14.5 billion of inflows

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China’s stock market witnessed US$8.5 billion in foreign inflows in November. Photo: Reuters

Amanda Lee

Published: 1:00pm, 9 Dec 2022

Foreign investors injected US$8.5 billion into Chinese stocks in November amid expectations of a rebound in emerging market securities, according to the latest report from the Institute of International Finance (IIF).

However, despite foreign investors snapping up Chinese equities, they offloaded US$3.1 billion in debt last month while making “impressive gains” in other emerging markets, the US-based IIF estimated.

Outflows from Chinese equities reached US$7.6 billion in October, with the remaining US$1.2 billion removed from bond markets, the IIF said on Thursday.

The sell-off in Chinese stocks and bonds by foreign investors accelerated following Russia’s invasion of Ukraine at the end of February, which the IIF attributed to wariness about geopolitical risk.

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Excitement and anxiety as China starts to reopen after zero-Covid

“Recent years have seen China attract steady flows, even as other emerging markets experienced lots of volatility,” the IIF said on Thursday. “That changed this year.

“Non-resident investor flows to China have essentially ground to a halt, which is consistent with anecdotes we pick up from market participants who have become more attuned to geopolitical risk.”