(Bloomberg) -- Foreign investors pulled $8.8 billion from Chinese financial markets last month as stocks slumped, according to estimates from the Institute of International Finance.
Outflows from China’s equity market reached $7.6 billion while $1.2 billion was removed from bond markets, the estimates show. That was more than in September, when a combined $2.1 billion of foreign portfolio investment left.
The estimates confirm local exchange data showing how unpopular onshore financial instruments have become with foreign investors as Covid Zero controls and a housing crisis hurt the economy and geopolitical concerns also sap sentiment. Outflows from stocks have continued so far this month despite a strong rebound from the historic rout in October.
“The shift to outflows in 2022 is notable and reflects lots of discussions in the asset management community,” Jonathan Fortun, an economist at IIF wrote in a release. “This shift reflects geopolitical concerns and anxiety that the government’s zero Covid policy could weigh on China in the medium term.”
Elsewhere, emerging markets excluding China saw $9.3 billion of inflows into equities and $8.7 billion into debt, according to the IIF. Overseas funds net bought more than $2.5 billion of stocks in the region’s emerging markets including India, South Korea and Thailand last week, the most since mid-August, according to the latest available exchange data compiled by Bloomberg. That data excludes China.
“We see the appetite for local currency bonds across the emerging market complex still weakening, which also contributes to a weaker outlook,” according to Fortun. “Continued volatility in the market (in both equities and yields) represents a risk for the outlook.”