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FT Chinese: Offshore Funds Are Leaving the Chinese Stock Market

On July 15, 2015, Financial Times Chinese published an article on its website titled, “Offshore Funds Pull Out of the Chinese Stock Market.” The article stated, “As of yesterday, global investors had been pulling capital out of Chinese stocks via Shanghai – Hong Kong Stock Connect for seven straight trading days. Since July 6, 2015, overseas buyers have liquidated 44.2 billion Chinese yuan (about 7.1 billion US dollars) from their Chinese stock holdings via the Stock Connect trading link between Hong Kong and Shanghai.

Beijing initiated tough rescue measures to save China’s stock market. It is allowing more than half of listed companies to suspend stock trading. Major shareholders have been banned from selling any shares of their stocks. China’s Central Bank has injected liquidity into the stock market.

For now, the rescue efforts have succeeded in containing the panic in the stock market. "Some rescue measures, however, have shocked Western investors, such as requiring listed companies to report good news in order to boost the price of their stock." Many analysts have recently criticized the Chinese government’s rescue efforts. They describe the current market improvement as a government induced rebound after a decline.

Michael Lai, investment director at GAM, wrote, “The final straw was allowing half the companies listed to suspend trading, effectively turning A-shares (Chinese domestic stocks) into an unsalable market.” Some investors doubt Beijing’s ability to support the market.

Source: Financial Times Chinese, July 15, 2015