China’s economy is in fresh turmoil, new data shows, as investors unload 10 billion pounds ($12 billion) of stocks.
According to statistics shared by JPMorgan, billions of dollars of Chinese stocks were sold off in August as experts point to a decline in the Chinese economy.
Strategists said Chinese stocks could improve in the fourth quarter if monetary policy improves, but there was no significant movement in the third quarter.
“Our view of the market, based on previous episodes, is not to catch a falling knife for now,” JPMorgan strategists said Wednesday.
Investors have put £10bn out of Chinese stocks, according to data from JPMorgan strategists.
Reuters
“We see Chinese stocks in a range for the third quarter, and customer feedback is noteworthy as they argue for further (full standard deviation) discounts to reflect the uncertainty.” That’s all.”
JPMorgan strategists said investors’ exposure to emerging market stocks has declined in a “dramatic shift.”
A recent poll by Bank of America found that investors are moving away from foreign markets and investing in the U.S. stock market instead.
A survey of 257 asset managers found that investors were underweight U.S. stocks by about 22% in August.
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But by September, investors were 7% overweight in U.S. stocks.
Respondents were also asked whether they thought China’s economy would improve over the next year, and a net zero percent said they thought it would.
Some experts say China’s export decline is a sign of economic decline, with official figures showing exports are down 8.8% this year compared to 2022.
Real estate is another pillar of China’s economy, but stock prices have plummeted to record lows due to weak sales, tight liquidity and increasing debt defaults.
Country Garden, China’s biggest property company, is showing signs of struggle after reporting a loss of £5.2bn in the first half of 2023.
The developer has four times as many construction projects as Evergrande, which collapsed in 2021 with hundreds of billions of dollars in debt.
One expert on China policy said a weakened economy could lead the Chinese government to turn toward nationalism in the face of economic collapse, which could be dangerous.
Michael Schuman said: “With a weakened economy, China’s leaders could become increasingly dangerous, more likely to champion nationalist causes and stumble into overseas adventures such as the military occupation of Taiwan.” said.
“I can only hope that Mr. Xi looks back on history and understands that a country’s power can only be exerted to the extent that its economic strength allows.”