(Bloomberg) — Global investors dumped China’s blue-chip stocks during the longest period of outflows on record, suggesting the country’s industry leaders are backing away as nuisance mounts.
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Foreign investors sold 6.2 billion yuan ($851 million) of Kweichow Moutai between Aug. 7-18, making China’s largest wine maker a best-selling stock through business links with Hong Kong. This was followed by a 4.7 billion yuan per share sale of renewables leader LONGi Green Energy Technology Co. and major lender China Merchants Bank Co.
Offshore funds have been fleeing the mainland market, offloading the equivalent of $10.7 billion in a series of withdrawals for thirteen days through Wednesday, the longest since Bloomberg began tracking the data in 2016. Their departure comes as more A prolonged housing slump is a broader risk. Financial contagion, making the country’s stock index among the worst global performers this month with a loss of nearly 8%.
The CSI 300 is now trading at its lowest level since November as the optimism that followed the July Politburo meeting quickly evaporated. Foreigners had moved into the market en masse at the time, only to leave again now in droves as economic data continues to disappoint and stimulus fails to take its toll.
The top 10 stocks sold by foreigners were in the latest trajectory among the top 50 stocks of the CSI 300. Major distillery Wuliangye Yibin Co., Ltd. and Ping An Insurance Group Co., Ltd. 2.9 billion yuan each as of Aug. 18.
Read: Fund managers in emerging markets deepen their short position in Chinese stocks
An analysis by Bloomberg Intelligence also shows that emerging market funds have turned more bearish on Chinese stocks, deepening their average lower position to nearly 100 basis points as of the second quarter from 24 basis points three months ago. They were 40 basis points overweight as of the end of 2022.
The sell-off series shows little sign of slowing down. Foreign funds lost another 10.5 billion yuan on Wednesday. One of the best-performing Chinese hedge funds has blamed global capital for flooding the country’s equities, calling them “a bunch of aimless flies” that stir up market volatility. However, foreign funds own less than 4% of all outstanding A shares, according to a report this month from China International Capital Corp.
– With the assistance of Abhishek Vishnoi.
(updating numbers all the time)
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