Chinese stocks slumped to their lowest level in 10 months on Thursday as foreign funds continued to exit the country as investors remained pessimistic about economic growth prospects. Hong Kong’s Hang Seng Index slumped by over 1%, while the MSCI China Index plunged by as much as 1.6%.
With concerns about the struggling property sector as well as overall economic growth persisting, global funds have sold over 27 billion yuan ($3.8 billion) so far this month via trading links with Hong Kong. This shows a persistent decline since the 90 billion yuan selloff in August. Ultimately, this shows the ineffectiveness of Chinese authorities’ efforts to boost capital markets and restore confidence in investors.
Wu Xianfeng, a fund manager at Shenzhen Longteng Assets Management Co. believes that the property market fallout and the hawkish monetary approach of the US Federal Reserve play a role in dampening investor sentiment. “One way we might be able to see a turnaround is if the state starts a new round of buying with a market stability fund,” Xianfeng suggested.