Global investors dump Chinese stocks by the most in a year amid US$557 billion market meltdown

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Offshore investors, stunned by the extent of China’s punitive regulatory onslaught, are fleeing the mainland markets at their fastest clip in a year. There was also no song and dance for a technology gauge on its first anniversary in Hong Kong.

They were net sellers of 12.8 billion yuan (US$2 billion) worth of A shares on Monday, according to Stock Connect data in Hong Kong compiled by Bloomberg. Their disposal is the largest since a 16.4 billion yuan retreat via the trading link’s northbound channel on July 24 last year.
Since foiling Ant Group’s jumbo stock offering in November on antitrust grounds, regulatory hawks in Beijing have sent the technology sector into a tailspin. The latest attack on private education firms lopped off US$294 billion from the onshore market on Monday.
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The 30-member Hang Seng Tech Index, introduced this day a year ago, has suffered a US$165 billion meltdown following steep losses by Tencent Holdings and Meituan. The Nasdaq Golden Dragon Index of 98 companies with mainland operations, lost US$98 billion overnight, according to Bloomberg data.
“People had expected the direction of upcoming regulations, but it has turned out to be far tighter than expected,” said Alan Li, portfolio manager at Atta Capital in Hong Kong. “So it’s understandable, no matter if people are limiting losses or are selling out of fear.”
The CSI 300 Index, a gauge of the biggest stocks traded in Shanghai and Shenzhen, slumped 3.2 per cent on Monday in its biggest sell-off since March 8. The Hang Seng Index lost 4.1 per cent, the most in 14 months, while the technology gauge tanked 6.6 per cent.
Three stocks bore the brunt of selling by offshore investors. They sold 1 billion yuan worth of stocks in electronic component producer BOE Technology Group, 881 million yuan in home appliances giant Midea Group and 594 million yuan in East Money Information.

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Posted 27 Jul 2021

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