According to data reported by Morgan Stanley, global fund managers divested a combined $3.1 billion worth of stocks in China and Hong Kong in October. This marked the third consecutive month in which global funds liquidated over $3 billion in shares across the two exchanges, bringing the total to more than $3 billion.
Morgan Stanley’s analysts attributed the substantial outflows of investment funds from the Chinese and Hong Kong stock markets to mounting concerns about the economic prospects of China. Notably, the Chinese manufacturing sector exhibited a more significant contraction than anticipated in October, contributing to the prevailing apprehensions.
Stocks that were shed during this period included JD.com, Xiaomi, and China Construction Bank. However, a contrasting trend was observed in the internet sector, where investments surged in companies like Alibaba and Baidu, along with prominent insurance companies such as AIA.
China’s economic trajectory has recently shown signs of deceleration. This decline is underscored by the data released by China’s National Bureau of Statistics (NBS), which revealed that China’s Manufacturing Purchasing Managers’ Index (PMI) for October had dropped to 49.5 from September’s 50.2, falling short of analysts’ expectations of 50.2. A PMI figure below 50 is indicative of the manufacturing sector being in a state of contraction.
Despite these challenges, China’s gross domestic product (GDP) for the third quarter of 2023 grew by 4.9% year-on-year, surpassing the 4.6% expansion anticipated by analysts. This unexpectedly robust performance offers a glimmer of hope amid the prevailing economic concerns.
The evolving dynamics in the global stock markets underscore the need for fund managers to remain vigilant and adaptable, responding to the shifting economic landscape with strategic decision-making.