The Chinese authorities launched a series of stimulus measures at the end of September, attracting some foreign capital into the Chinese stock market. However, with concerns about the Chinese economy from the outside world, foreign capital has been withdrawing from the Chinese stock market for five consecutive weeks, with outflows totaling $16.9 billion in the past four weeks, reaching a historic high.
According to a report from “Nikkei Chinese Net” on November 19, the robust U.S. economy and China’s slowing economy have led to a massive outflow of funds from global emerging market stocks and bonds. From November 7 to 13, the outflow of funds from emerging market equity funds reached approximately $7.4 billion, the highest since August 2015. Bond investment trusts have also seen continuous net outflows for four weeks.
The report highlights the noticeable outflow of funds from Chinese stock funds. Funds have been flowing out of the Chinese stock market for five consecutive weeks, with outflows totaling $16.9 billion in the past four weeks, representing a historic high. In early October, there was a record influx of funds due to expectations of economic stimulus measures by the Chinese government, but concerns about economic slowdown led to funds flowing out again.
Naoki Tsukoka, chief economist at Mitsubishi Research & Technology in Japan, stated that the conclusion of the Communist Party congress on November 8 did not introduce further fiscal stimulus, leading to increasing market views that it fell “below expectations.”
In addition to concerns about the slowdown in Chinese economic growth, the policies to be promoted by U.S. President-elect Trump after taking office will also be a focus. Currently, the Republican Party holding the presidency and the majority in both houses of Congress has solidified a “Republican Trifecta.”
The report notes that an increasing number of views believe that the possibility of Trump’s campaign promises, such as raising tariffs and deporting illegal immigrants, being translated into actual policies is growing.
Haruimi, an analyst at Nomura Securities specializing in foreign exchange, believes that just as China and Mexico, which are more likely to be negatively affected by Trump’s policies, and Eastern European countries that are less likely to be affected, future funds will also be selectively invested in these emerging market countries.