Merakyat.org – Key indicators of Chinese stocks are witnessing a significant downturn, reaching their lowest in nearly 10 months. Despite the proactive measures taken by Beijing to stimulate the markets, global funds have pulled out a staggering $3.8 billion in September alone. The trading activity has also seen a decline, with a 32% drop since the beginning of the month.
Beijing’s proactive approach to rejuvenate the Chinese markets seems to be falling on deaf ears. Even after the country’s authorities made promises to reinvigorate the markets during the July Politburo meeting, the CSI 300 Index, which is a benchmark for mainland shares, plummeted to its lowest since the previous November. The MSCI China Index has followed suit, also hitting a 10-month low.
These declines come despite Beijing’s introduction of measures aimed at stimulating the economy and attracting investors back. Such measures include lowering transaction fees on trading and implementing stricter controls on stake sales among top shareholders. However, the economic concerns that have plagued China this year have significantly affected the investing sentiment in the nation. With Beijing grappling with a rising debt crisis in its property sector and a noticeable slowdown in consumer and manufacturing activity, traders have been steadily withdrawing from the country for several months.
The Federal Reserve’s decision to maintain high interest rates has also played a role, making the Treasury markets a more appealing investment option. The recent Fed meeting, which indicated that the rates would stay elevated for an extended period, further fueled the exodus from China.
In terms of numbers, global funds have withdrawn $3.8 billion from onshore Chinese stocks, following a massive $12 billion selloff in August. The trading activity in China has also seen a decline this September, with the daily average turnover for stocks in Shanghai and Shenzhen dropping by 32% since the month’s start.
In an attempt to boost valuations, firms listed in Hong Kong are ramping up share buybacks in the offshore market. Additionally, some of the largest Chinese corporations are projected to distribute a record 1.5 trillion yuan in dividends this year.
This September’s retreat is not just confined to the stock market. The overall capital outflows from China have surged, reaching their highest levels since 2015.