Damir Sagolj/Reuters
- Foreign investors dumped Chinese stocks at a record pace as fear of economic turmoil persists.
- Net sales on Chinese equity markets in August totaled $12.4 billion, according to the Financial Times.
- That comes as Beijing's efforts to tackle the economic slowdown have so far disappointed investors.
Foreign investors dumped Chinese stocks at a record pace in August as the economy continued to sputter while turmoil in the property sector deepened.
Net sales by offshore traders on Chinese equity markets totaled $12.4 billion, according to calculations by the Financial Times. That's the biggest monthly retreat on records going back to 2014.
After a promising first quarter, China has seen its industrial and retail sectors cool sharply, while deflation has set in and youth unemployment hits record high. But excessive debts have made Beijing skittish on pursuing large stimulus solutions.
Instead, authorities have applied piecemeal support, which has failed to give global investors confidence that China will tackle the economic slowdown. Despite a slew of stimulus measures, data continue to point toward weakness.
On Thursday, a Chinese manufacturing gauge indicated activity shrank for a sixth straight month, and the services sector slowed further as consumers keep spending tight.
Meanwhile, separate data showed China's top real estate developers have seen sales tumble by a third compared to a year ago. In mid-August, developer Country Garden missed payments on two international bonds, asking to push back yuan payments.
Foreign investors had already shed Chinese assets earlier this summer and in the spring as the reality of China's economic slump began to set in.
But capital flight from China may also stem from growing political risk. Recently, economist Robin Brooks proposed that investors are withdrawing as a result of Beijing's growing authoritarianism.
Meanwhile, the US and China continue to limit trade and investment, with Beijing's updated anti-spy law putting foreign firms at greater legal risk.
Such concerns caused US Commerce Secretary Gina Raimondo to note that Western companies see China as "uninvestable," during her recent visit to the country.