China’s equity market had its seventh consecutive month of foreign outflows in September.
According to Reuters, citing data from the Institute of International Finance on Wednesday, October 5, the debt market added the loss of $1.4 billion to the total of $98.2 billion that has flown from China’s asset class since February.
Chinese stock portfolios also dropped $700 million in September, marking an outflow of $2.2 billion to date.
The country’s growth outlook keeps weakening with COVID-19 curbs that halted factory activities and slowed service sectors. Investors are also turning away from the Chinese market amid the strong greenback and a depreciated yuan.
Other countries in emerging market (EM) Asia face a similar situation. Equity and debt portfolio flows have suffered significantly throughout 2022. The region sums up the total outflows of $69.7 billion this year, compared to $47.63 billion outflows in 2008.
Yeap Jun Rong, a market strategist at IG, stated, “The cloudy outlook on economic conditions and firm policy stance from the Fed, risk sentiments may still lean toward some caution, which may lead to a lukewarm inflow for Asian equities in the near term at best.”
Sharing the same view is IIF economist Jonathan Fortun. He said, “Mounting global recession risk is weighing on EM flows as anxiety builds over geopolitical events, realized inflation, and uncertainty about the capacity of policymakers to weather the current context.”