649 Beijing has taken steps to restrict access to key data on domestic investments as foreign investors sell off Chinese stocks sharply and fears of capital flight in 2024 grow.
The developments, reported by the Financial Times, mark another move by the Chinese Communist Party to limit transparency about the country’s economic situation as it grapples with market instability.
Starting Monday, the Chinese government stopped providing daily data on net investment flows from overseas funds into mainland stocks. Instead, these numbers are only released on a quarterly basis. This comes as global funds are withdrawing large amounts of capital from China’s stock market, with 2024 potentially becoming the first year of net capital outflows since the launch of the Stock Connect system in 2014. .
Foreign investors have withdrawn more than $12 billion from mainland Chinese stocks since early June, according to data from the Hong Kong Stock Exchange. Analysts believe that a reversal of previous capital inflows (supported by the offshore arm of state institutions) led to negative net capital flows this year. The change is notable as it bucks a nearly decade-long trend of net investment in China through Stock Connect, a system that gives foreign investors access to Chinese stocks.
The Chinese government’s decision to restrict data access coincides with growing efforts to boost market confidence amid growing concerns over the country’s economic slowdown and continuing problems in its real estate sector. Chinese regulators had already suspended access to real-time trading data on foreign investors’ trades in May, citing similar concerns.
This latest move adds to a series of data restrictions imposed by Chinese authorities in recent years. The practice of restricting access to potentially negative data is not new in China. Last year, regulators banned some fund management companies from displaying the estimated net asset value of mutual funds. In a more high-profile example, the Chinese government also stopped publishing statistics on youth unemployment after it reached a record high.
The decision to restrict data access shows the Chinese government’s cautious approach to handling information that could undermine investor confidence. The rapid outflow of foreign capital follows concerns about China’s economic slowdown, which has been exacerbated by the ongoing real estate crisis. Key sectors of China’s economy, including real estate, continue to face uncertainty, and the Chinese government is under pressure to mitigate potential long-term impacts.
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