China Wants International Investors Kept in the Dark

If global investors are pulling out of Chinese markets at an alarming rate, Beijing won’t be sounding the bell.

This week, Chinese authorities restricted access to daily data on the Stock Connect platform that shows how much (in this case, how little) foreign money is pouring into the country’s stock market, opting to only release those figures quarterly, the Financial Times reported. 

With global investors pulling more than $12 billion out of Chinese securities since the start of June, Beijing doesn’t want that trend to continue. However, its latest coverup tactic may do exactly that, and create the potential for 2024 to be a year of equity outflows for the Middle Kingdom.

Nobody’s Gonna Know

There are plenty of reasons why foreign investors and funds are losing their taste for China. Its economy is slowing as cash-strapped citizens, who are still struggling through the nation’s real estate crisis, are spending less, among other concerns:

• In the second quarter, China’s economy grew 4.7%, its slowest since the first quarter of 2023.
• Rising geopolitical tensions between China and much of the Western world, marred by trade wars and office raids, has many looking for an exit. 
• Other markets are also becoming more appealing, especially India, where companies like Apple and Tesla have moved some of their production.

As a result, China’s CSI 300, which tracks the top securities traded on the Shanghai and Shenzhen stock exchanges, has fallen roughly 2% this year. Meanwhile, the S&P 500, Japan’s Nikkei 225, India’s Nifty 50, and Germany’s DAX have all seen their performance increase year-to-date.

They’re Gonna Know: Not releasing data has become China’s modus operandi as of late. Youth unemployment in the Middle Kingdom has gotten so high — pushing 40% in some rural areas — that China just stopped reporting monthly data on it last summer. Around that same time, China asked asset managers and fund houses to stop reporting real-time estimates of their mutual funds’ net value, state-owned newspaper the Securities Times first reported. What’s next? Dog ate the homework.