China's economic growth slows down, foreign capital continues to withdraw from the Chinese market

In the early morning of July 4th, Beijing time, the Wall Street Journal (WSJ) reported on Thursday that investors are continuing to withdraw from the Chinese market. Everyone is worried about the slowdown of China's economic growth, while the Chinese government has repeatedly dispelled the market. Again, the expectation of stimulating economic growth.

In the past 18 weeks, 16 weeks of global fund managers have chosen to withdraw from the Chinese stock market, including a net outflow of $834 million in five days before June 5. Data provided by data provider EPFR shows that this is also the largest single-week outflow since January 2008, during the financial crisis.

This bleak sentiment has also infected the foreign exchange market, and investors have been betting that the RMB exchange rate will fall, in stark contrast to the PBC’s efforts to maintain a strong renminbi.

The result of this market trend is that by the end of Wednesday, the Shanghai Composite Index has fallen by 12.1% since 2013. In response to signs that the easing of the monetary supply by major central banks is coming to an end, investors have withdrawn from emerging markets around the world in recent weeks. In Asia, due to the increase in the problems faced by China, the amount of funds flowing out of China is particularly large.

The Hong Kong Hang Seng China Enterprises Index, which tracks the performance of Chinese companies, is even more pronounced than the Shanghai Composite Index. The decline to 2013 has reached 22%. The Hong Kong market is also a priority for many foreign investors to gain exposure to the Chinese market.

Many analyses attribute this situation to China's delay in taking action to stimulate slowing growth. Although the Chinese government finally came forward to ease the interbank lending market because the People’s Bank tried to solve the cash tension caused by the loss of credit growth, the next important meeting of China will not be held until the fall of 2013, which makes investors in China. There is no clear guidance on the direction of economic policy.

On the other hand, Chinese Premier Li Keqiang also hinted that the Chinese government is unwilling to change monetary and fiscal policies to counter the slowdown in growth, while pledging to continue to push forward reforms that will make growth more sustainable.

"There is no one who can make a policy and then everyone will follow," said Lotte, the Asia-Pacific securities director of BNP Paribas Investment Partnership, which manages $2 billion in assets. He said that because of this uncertainty, Chinese assets will only be A smaller part of the portfolio managed by his name, tracking benchmarks.

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