On November 9, preliminary statistics from the Institute of International Finance (IIF) indicated that the size of foreign investment capital withdrawn from the Chinese market in October amounted to $8.8 billion. The association argues that the Chinese economy is facing internal and external troubles.
According to IIF data, the equity capital outflow of foreign investors amounted to 7.6 billion yuan (about $1.1 billion), while the bond market inflow amounted to about $169 million. At the same time, Chinese bond portfolios posted monthly outflows since Russia invaded Ukraine in February, totaling $105.1 billion over nine months.
IIF economist Jonathan Fortun pointed out that geopolitical pressures have contributed to foreign capital outflows from China, and investors’ expectations fell on concerns that the CCP’s implementation of the “zero-COVID” policy will put pressure on the economy in the medium term.
Investment bank Morgan Stanley also pointed out that, given the current situation, the Chinese bond market could face the first wave of foreign capital withdrawals in over 20 years this year, with a total size of more than $100 billion.
Despite the cash outflow from the Chinese market, the entire Asian market still saw a net inflow of $5.6 billion, IIF reported. Stock markets including India, South Korea, and Thailand posted net inflows of more than $2.5 billion in the week ending November 4, the highest since mid-August, according to Bloomberg.
Regarding domestic data in China, on November 9, the CCP released the consumer price index CPI and industrial producer price index PPI for October, in which the CPI increased by 2.1%, the price of pork increased by 51.8%, while the PPI decreased by 1.3% over the same period last year.
In October, coal industry prices fell 16.5%, and processing and ferrous metallurgical prices fell 21.1%.
The industry warns that the PPI data reflects the impact of the “zero-COVID” policy, according to Sound of Hope. Japan’s Nomura Securities initially estimated that this policy had impacted up to 12% of China’s GDP.