Escape from China? Foreign investments drop for the fourth consecutive month
According to the "Wall Street Journal" taken up by US RFA , in May, foreign investors reduced their holdings in Chinese bonds to a total of $ 16.2 billion (RMB 109.4 billion) and RMB bonds suffered an outflow of capital for the fourth consecutive month. The total reduction since February has exceeded $ 60 billion. The yuan also reached its weakest level in 20 months in May.
At the end of May, total foreign holdings of Chinese bonds stood at $ 542.8 billion, the lowest in a year, the report said. Institutional investors continued to shift their funds into other higher yielding assets, arguing that "this is arguably the largest divestment cycle since mid-2017".
It is emphasized that China's protracted epidemic prevention and control measures have severely slowed the growth of the world's second largest economy and weakened the attractiveness of Chinese bonds to investors. The renminbi has depreciated rapidly since mid-April, falling below 6.82 per dollar on May 12, the lowest level since September 2020. Since then, the yuan has rebounded slightly to trade at 6.71 per dollar.
The move is a response on the one hand to the dangers of further devaluation of the Yuan, and on the other to the still expansionary policy of the Chinese central bank, which must also support the problematic internal market.
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The article Escape from China? Foreign investments drop for the fourth consecutive month comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/fuga-dalla-cina-gli-investimenti-esteri-calano-per-il-quarto-mese-consecutivo/ on Thu, 16 Jun 2022 20:44:44 +0000.