Foreign investors have snatched back nearly 90% of the money they put into Chinese stocks this year

• Foreign investors have pulled about $29 billion out of Chinese stocks this year, according to the Financial Times.
• That means net foreign investment in China-listed shares this year has dropped 87%.
• The exodus arrives as China's economy has been battered by a property crisis and slow growth post-COVID.

Foreign investors are yanking their money out of the Chinese stock market, and this year could mark the the smallest year of foreign inflows since 2015.

Since peaking at 235 billion yuan in August, net foreign investment in Chinese shares is down 87% this year to just 30.7 billion yuan, according to a Financial Times analysis of data from Hong Kong's Stock Connect. That means about $29 billion has been sucked back out of China-listed stocks in 2023.

The investor exodus has largely been spurred by fears surrounding China's battered economy, which has failed to sustain its rebound from zero-COVID policies amid a crumbling real estate sector, massive debts, and buckling consumer demand.

A key turning point came in August, was when one of the country's biggest developers, Country Garden, missed bond payments and exposed the severity of the property crisis. Since then, foreign investors have been net sellers.

The MSCI China index, one tracker of Chinese stocks, has declined by 14% this year. That's unlike the growth seen in US stocks, and even other emerging markets like India or South Korea. In the past month, as the S&P 500 has gained 4.7%, China's benchmark CSI 300 index has fallen over 3%.

And the beatings continue for Chinese stocks as investors fear Beijing will remain reluctant to provide aggressive stimulus for the the economy while it also cracks down on businesses. 

On Friday, traders sold off video-gaming stocks after Beijing announced stricter rules regulating the sector. Shares of companies like Tencent, NetEase, and Bilibili plummeted.

With two trading days left in the year, Chinese markets are looking at ending 2023 on a low note. While offshore investment dropped dramatically after 2021, this year is likely to mark the smallest inflows since 2015, the first full year of the Stock Connect program.