Global investors have been shedding China’s blue-chip stocks in a record-selling streak, showing that even the nation’s industry leaders are falling out of favor as a rout deepens.
Foreign investors sold 6.2 billion yuan ($851 million) in Kweichow Moutai Co. between August 7 and August 18, making China’s largest liquor maker the most heavily traded stock through trading links with Hong Kong.
It was followed by 4.7 billion yuan of selling for leading renewables stock LONGi Green Energy Technology Co. and major lender China Merchants Bank Co., according to the most recent individual stock data made available by Bloomberg.
Overseas funds have been fleeing the domestic market, with $9.3 billion worth of withdrawals through Tuesday, the longest streak since Bloomberg began tracking the data in 2016.
Their departure comes as a prolonged housing slump raises the risk of broader financial contagion, causing the nation’s equity benchmark to lose 7% this month and rank among the worst globally.
The CSI 300 Index is trading near its lowest level since November, as optimism following the Politburo meeting in July rapidly dissipated. Foreigners entered the market en masse then, only to depart in droves now as economic data disappoints and stimulus fails to impress.
The ten most-sold stocks by foreigners in the most recent rout were among the top 50 on the CSI 300. Through August 18, major distiller Wuliangye Yibin Co., China’s Ping An Insurance Group Co., and EV maker BYD Co. each sold at least 2.9 billion yuan.
According to Bloomberg Intelligence, emerging market funds have become more bearish on Chinese stocks, increasing their average underweight position to nearly 100 basis points in the second quarter from 24 basis points three months earlier.
They were 40 basis points overdue as of the end of 2022. The sales streak shows no signs of slowing down.
Market Volatility and External Influence: A Chinese Hedge Fund’s View
As of mid-Wednesday, overseas funds had lost more than 7 billion yuan. A top-performing Chinese macro hedge fund blamed global capital for the country’s stock market decline, calling it a “bunch of aimless flies” that cause market volatility.
Despite this, China International Capital Corp. reported that foreign funds hold less than 4% of outstanding A-shares this month.