China’s Economy Hit by Fresh Turmoil as Investors Ditch £10 Billion in Stocks
Introduction
China’s economy has been hit by fresh turmoil after investors sold £10 billion ($12 billion) worth of stocks, according to new data. Experts have pointed to China’s dwindling economy as the cause for the sell-off.
Investors Remain Cautious
Although strategists believe that Chinese stocks could improve in the fourth quarter if there are improvements in monetary policy, they noted that the third quarter has seen no strong moves. JPMorgan strategists advised against trying to catch the falling knife.
Shift in Investor Sentiment
JPMorgan strategists also noted that investors’ exposure to emerging market stocks had dropped in a “dramatic shift”. A recent poll by Bank of America found that investors are increasingly investing in the US stock market instead of foreign markets.
China’s Declining Exports
China’s declining exports have been cited as a sign of its failing economy. Official figures show that exports have dropped 8.8% this year compared to 2022. Another core pillar of China’s economy, real estate, has also been struggling with tumbling sales, tight liquidity, and debt defaults.
Concerns of Economic Weakness
China’s largest real estate firm, Country Garden, reported a £5.2 billion loss in the first six months of 2023, indicating signs of struggle. Economic weakness could make Beijing dangerous as they could turn to nationalism in the face of a crumbling economy, according to experts.
