The Great China Unwind: Foreign Investors Pull $29B Out Of Chinese Equity Markets In 2023
Portfolio Pulse from Neil Dennis
Foreign investors have withdrawn $29 billion from Chinese equity markets in 2023 due to growth concerns and real estate sector losses. The Shanghai Composite, China A50, and Hang Seng indices have all seen significant declines. BlackRock's iShares MSCI China ETF (MCHI) and iShares China Large-Cap ETF (FXI) have also experienced substantial drops in value. The People's Bank of China (PBoC) is under new oversight and is attempting to support the economy. Fund managers consider China's real estate sector a potential source for systemic credit events, and short-selling on Chinese equities has become a crowded trade. New York-listed Chinese stocks like Tencent (TCEHY) and Alibaba (BABA) have also seen their values decrease this year.
December 28, 2023 | 3:23 pm
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NEGATIVE IMPACT
Alibaba's (BABA) shares are down nearly 14% this year, as the company faces internal challenges and aligns with the negative trend in Chinese equities.
The negative investor sentiment towards Chinese equities and specific issues faced by Alibaba are expected to continue to affect BABA's stock price in the short term.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 70
NEGATIVE IMPACT
iShares China Large-Cap ETF (FXI) has decreased by 15.4% over the year, reflecting the broader downturn in Chinese equities and investor concerns over China's economic stability.
FXI's performance is closely tied to the Chinese large-cap equities, which have been negatively impacted by the withdrawal of foreign investments and concerns over the real estate sector.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80
NEGATIVE IMPACT
BlackRock's iShares MSCI China ETF (MCHI) is down 13.8% year to date due to the significant outflow of foreign investment from Chinese equity markets and overall negative sentiment towards China's growth prospects.
The outflow of foreign investment and negative sentiment towards China's economic growth are likely to continue to put downward pressure on MCHI in the short term.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80
NEGATIVE IMPACT
Tencent's American Depository Receipts (TCEHY) have fallen 13.6% this year, influenced by internal pressures and a general bearish sentiment on Chinese stocks.
TCEHY is likely to face continued short-term negative impact due to the broader market sentiment and specific challenges within China, including the real estate sector.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 70