Foreign investors flee China shares, long-delayed data shows

THE amount of Chinese shares owned by foreign investors fell in 2023 for a second straight year as the market slump cut the value of shareholdings and investors left for higher returns elsewhere.

Foreign entities owned 2.8 trillion yuan (S$523.3 billion) of onshore Chinese equities at the end of last year, according to data released on Wednesday (Feb 21) by the People’s Bank of China (PBOC). That was down 13 per cent from 12 months earlier, and marked a drop of almost 30 per cent from the peak at the end of 2021. The value of bonds held by overseas entities rose almost 8 per cent last year, the data showed. 

Wednesday’s data underscores findings from other indicators that also showed divestment by global funds from China’s onshore shares throughout 2023 as they sought alternatives in other markets, such as India and Japan. The relentless selling continued into the new year, with foreigners offloading a net 14.5 billion yuan of shares in January via trading links with Hong Kong, data compiled by Bloomberg show.

Figures for the second half of the year were published after a lengthy and unexplained delay. Before the latest release, the breakdown of overseas holdings of yuan assets, including equities, was last provided in August when the PBOC gave figures through the second quarter of 2023. Third quarter data in recent years has typically been published in October or November, with information on the final three months of the year usually disclosed the following January or February. 

The PBOC figures did not include any explanation for the delay. Bloomberg News had earlier asked the central bank about the missing statistics. 

The lack of data transparency is an issue in China, where the publication of some statistics has ceased without explanation – particularly in cases where the information has not been favourable for the economy or markets. That opacity has at times hampered the ability of investors to assess China’s economic health, amid their increasing concerns over Beijing’s heightened sense of priority on national security.

There have been other, rare cases where missing data has been restored after a lengthy absence. The National Bureau of Statistics last month resumed publishing the youth jobless rate after policymakers spent months tweaking their methodology on the figure, which hit a record high last summer.

Beijing’s tightening control over corporate and economic data it deems sensitive is adding to challenges in understanding China’s future development in key fields for companies, government and researchers alike, according to the Mercator Institute for China Studies. 

Only 68 per cent of documents from the State Council – China’s Cabinet – were released publicly in 2022, down from 88 per cent in 2015, the German think tank said in a recent report.

The PBOC has also halted the release of a survey on bank depositors’ sentiments, which was last published in June. Surveys on companies and banks have also stopped. The depositor poll had shown an increase in the number of residents who said they plan to save more as their confidence in future employment and income stayed below pre-Covid levels. 

The PBOC has not responded to previous requests seeking comment on the release of depositor survey. 

In September, the China Securities Depository and Clearing – which is owned by the Shanghai and Shenzhen bourses – stopped releasing data on new equity investors and stock market trades. The omission came after top leaders’ calls to invigorate capital markets and boost investor confidence failed to stem the slide in shares. 

The China Securities Depository didn’t respond to a request for comment. BLOOMBERG