Foreigners turn sellers of China A-shares on worries over trade war, less stimulus

SHANGHAI/Hong Kong - Foreign buying of Chinese stocks has slowed significantly since March and turned negative in April, as investors worried that Beijing is turning more cautious about further stimulus amid signs that the economy is starting to stabilize.

Net flows into the Shanghai and Shenzhen stock markets via the Stock Connect scheme totaled 4.4 billion yuan in March, down sharply from 60.4 billion yuan in February. “For large international institutional investors, the return had been pretty satisfactory for the year. Therefore it was reasonable to take profit after 30-plus-percent return while the corporate earnings didn’t support a further rally,” Louis Lu, a Hong Kong-based fund manager at CSOP Asset Management.

China’s stocks fell the most in more than 3 years on the first trading session of May, as investors scrambled to dump stocks amid a fresh deterioration in Sino-U.S. trade relations. Zhang Gang, an analyst with China Central Securities, said it was natural for foreign investors to reduce holdings after the robust rally early in the year, given uncertainties including the Sino-U.S trade talks, U.S.-EU trade tensions and Brexit.

Among sectors most sold by foreign investors were liquor makers and home appliance makers that had drawn most of the inflows earlier in the year.

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