Global investors dumped China’s flagship stocks in a record selling streak, showing the country’s industry leaders are falling out of favor amid worries about the economy.
Foreign investors sold 6.2 billion yuan (676 million pounds) worth of Kweichow Moutai from Aug. 7 to 18. This made China’s largest liquor maker the top-selling stock through trade ties with Hong Kong.
Sales followed, each worth 4.7 billion yuan to renewable energy leader LONGi Green Energy Technology and major lender China Merchants Bank.
Foreign funds have exited the Chinese market, withdrawing the equivalent of £7.3 billion in a 12-day streak of withdrawals through Tuesday, the longest streak since Bloomberg began tracking the data in 2016.
The exodus comes after China stunned markets with its latest rate hike earlier this week.
The world’s second-largest economy is grappling with a prolonged slump in the housing market, putting its CSI 300 index among the world’s worst performers, falling 7 percent this month. It is now trading near its lowest level since November.
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What happened overnight?
Asian markets were mixed as investors awaited tech darling Nvidia’s results to see if the sector’s lofty valuations can withstand a rise in bond yields, while still-dark factory data from Japan kept sentiment fragile.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.3 percentage points, not far from its nine-month low two sessions ago. The Japanese Nikkei also recorded a gain of 0.3%.
Data on Wednesday showed that factory activity in Japan fell for the third straight month in August, offering the first glimpse of the health of global manufacturing this month. The United States is also due to release its preliminary PMI readings on Wednesday, which are likely to show the factory sector continuing to contract.
The benchmark 10-year Japanese government bond yield rose to a new 9-1/2-year high of 0.675 percent as investors took the Bank of Japan’s decision to refrain from intervention on bond purchases as a green light for further selling.
In China, blue chips failed to match Tuesday’s gains, falling 0.9 percent, while Hong Kong’s Hang Seng Index held up better, gaining 0.6 percent after rising 1 percent.
Wall Street stocks ended Tuesday lower as higher Treasury yields fueled concerns over whether the Federal Reserve will keep interest rates high for longer.
The Dow Jones Industrial Average fell 0.5 percent to 34,288.83, while the broad-based S&P 500 fell 0.3 percent to 4,387.55.
The technology-focused Nasdaq Composite Index rose 0.1% to close at 13,505.87.
The benchmark 10-year Treasury yield neared a 16-year high after interest rate fears triggered a sell-off in the bond market.
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