Disappointment over weak recovery spooks investors

Beijing China’s bumpy recovery and rising geopolitical tensions caused international investors to withdraw the equivalent of $6.3 billion from mainland China’s stock markets in the second quarter. This is the result of calculations by the Handelsblatt based on data from the Stock Connect system on the Hong Kong stock exchange. Institutional investors are using the system to invest in the Shanghai and Shenzhen markets due to Chinese capital controls.

The strong outflows in March, April and May are likely to be primarily attributable to hedge funds. They have now withdrawn 70 percent of the money they invested in China at the beginning of the year after the abrupt end of the zero-Covid policy, according to an analysis by the US investment bank Goldman Sachs. In January, global financial investors had invested the equivalent of a total of 18 billion dollars on the Chinese mainland stock exchanges and speculated on profits as a result of the opening.