China Huge Capital Flight – $5,100,000,000 Exits Struggling Stock Market

It seems that China has just seen the biggest capital flight in 7 years. Check out the latest reports about the matter below.

According to a report by Goldman Sachs, China is currently experiencing the largest capital flight since 2016 due to a struggling equities market.

The report, which was seen by the South China Morning Post (SCMP), states that foreign investors have sold off a net total of $3.3 billion in domestic Chinese stocks, resulting in total outflows of $5.1 billion in October.

Analysts at Goldman Sachs attribute this trend to higher rates in the US and the depreciation of the yuan against the dollar.

“With ‘higher for longer’ interest rates in the US and the need for more monetary policy easing in China, the pressure for capital outflows and [yuan] depreciation persists… Policymakers appear to put more weight on confidence and stability in foreign-exchange management.”

Since hitting a low point in January of this year, the USD has strengthened by over 9% against the yuan in 2023 so far.

According to Goldman Sachs, China saw $75 billion in net capital outflows in September, which is the largest outflow since 2016. This came after a $42 billion outflow in the previous month.

Recently, the Chinese government has taken new measures to prevent the spread of the country’s property crisis, which was partly caused by the bankruptcy of Evergrande, a huge real estate developer that went bankrupt in 2022.

Authorities are reportedly getting ready to help commercial banks and rural financial institutions replenish their capital, while also assisting them in disposing of bad assets and loans.

Some local governments have also issued new special-purpose bonds to help smaller banks raise money.

Other than this, there have been enormous moves in the markets these days, as the BTF ETF will soon be approved according to the latest reports. Make sure to stay tuned and keep your eyes on the market.