As China’s economic downturn continues, there are concerns about a massive outflow of funds from the stock market. Meanwhile, uncertainty in the Chinese stock market is expected to increase as investors’ access to information on overseas fund flows is blocked.
According to Bloomberg News on the 18th, investors will not be able to obtain key indicators of the market as the Chinese stock exchange stopped disclosing daily data on overseas fund flows from the 19th. As foreign funds continue to flow out of the Chinese stock market, it is seen as a desperate measure to reduce rapid volatility.
In China, there has been a steady lack of data transparency, but some statistics are often stopped without explanation. In particular, information that is not favorable to the economy or market is highly controlled. If the flow of overseas funds is not disclosed from the 19th, the daily data that can be found on the Chinese exchange will be only the total volume and number of transactions of stocks and exchange-listed funds made through the Hong Kong exchange, and the trading volume of the top 10 stocks.
“The Chinese authorities are stopping the announcement because the data is bad and volatile,” said Ng Xinyao, head of investment at global investment firm Aberdeen Asia. He pointed out that he wants capital outflows not to increase in China, but not releasing the data will not solve the underlying problem.
If foreign selling continues, China will have a net annual outflow of funds from the stock market for the first time since 2016. China’s benchmark CSI300 index is down more than 9% from its peak in May this year. This is contrary to the 13% increase in Japan’s Topix and India’s Nifty 50.
The Chinese stock market has remained weak due to growing concerns over a slowing economy. According to the South China Morning Post in Hong Kong on Monday, the Shanghai Stock Exchange and Shenzhen Stock Exchange recorded a total of 472.9 billion yuan (89.4 trillion won) on Tuesday, the lowest level since May 25, 2020. China’s share of total market capitalization also hit its lowest level since late 2019.
SALLY LEE
US ASIA JOURNAL
