Why foreign investors are withdrawing massive amounts of money from the Chinese stock market and the Chinese economy is being shaken.

Why foreign investors are withdrawing massive amounts of money from the Chinese stock market and the Chinese economy is being shaken.

According to a report by amp.focus.de,

Foreign investors' confidence in the Chinese economy has fallen, leading to massive capital outflows from the Chinese stock market. According to the Financial Times, almost 90 percent of foreign funds that flowed into the Chinese stock market at the beginning of 2023 have been withdrawn. This trend is due to growing doubts about the Chinese government's ability to take effective measures to stimulate growth.

Net foreign investment in China-listed stocks has fallen 87 percent since its peak in August, from about $33 billion to about $4.3 billion. This massive outflow of capital is leading to significant uncertainty on the market, which was also reflected in a 3 percent decline in the leading CSI 300 index in December.

The crisis at property developer Country Garden has contributed to shaking confidence in the Chinese economy. This loss of trust extends to consumers, businesses and investors both domestically and internationally. International investors are becoming increasingly pessimistic about the Chinese economy's prospects, despite positive economic data.

To offset the capital outflow, China-listed companies have carried out widespread share buybacks, and domestic investment funds and state financial institutions have made large purchases. These measures are supported by the government to support falling valuations.

Overall, the massive capital flight from foreign investors indicates deep uncertainty about the prospects of the Chinese economy. This development could have a negative impact on the Chinese stock market and the country's economic stability.