Foreign investors continued to be pessimistic about China’s economic outlook, and international investors accelerated selling yuan-denominated bonds. The U.S.-China Chamber of Commerce said that investment confidence in U.S. companies in China has fallen to a record low. In addition, the European Union is planning to follow the example of the United States and impose export controls on China.
As of October, only 1% of China’s domestic stock funds have made a profit, the remaining 99% have lost.
A new round of pandemic cases recently broke out in the Foxconn factory in Zhengzhou, Henan province. Foxconn is expected to increase the hourly wages of employees by 30% to coax employees to return to work and bring in new hires.
APEC summit, Xi’s visit is in vain
The pro-CCP media Hong Kong 01 reported that Thai Foreign Minister Don Pramudwinai said on October 31 that Chinese leader Xi Jinping would attend the Asia Economic Cooperation forum in November and the United States will send Vice President Kamala Harris to attend.
Don told media in Bangkok that Xi had confirmed he would visit Thailand as a “special guest” of the Thai government.
Analysis: China’s capital market allows companies to lie
The CCP’s “one bank, two committees and one office” recently held a meeting, vowing to protect China’s stock, bond and real estate markets.
“One bank, two committees and one office” refers to the Central Bank of the Communist Party, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange.
Among them, the China Securities Regulatory Commission announced the establishment of a “modern capital market with Chinese characteristics” and mentioned China’s distinctive traditional culture.
Xia Yifan, a Chinese political commentator, told The Epoch Times, “Under the threat of the COVID-19 and the threat of reunifying Taiwan by force, the opportunity to take advantage of foreign capital for China’s economic development has been closed. Capital has fled, and new foreign investment has refused to enter the market. So, where will the investment come from?”
Xia added that the development of the stock market and the bond market mainly depends on people’s trust in regulators and the institutional environment, so Western countries have established a strict information disclosure system to protect shareholders’ rights and interests, and at the same time maintain shareholders’ confidence in the markets. Trust in regulators and the environment institutions are what the Chinese market lacks the most.
Xia pointed to the example of Chinese companies listed in the U.S. that would rather delist than tell the truth to their shareholders, and the CCP supports those companies to lie. Therefore, companies that lie to shareholders are “the reality of the Chinese market,” and “modern capital markets with Chinese characteristics” allow companies to lie.
99% of Chinese stock funds collapsed, only 1% made profit
Affected by factors such as pandemic restrictions, Chinese stocks have suffered heavy losses this year. As of October, only 1% of China’s domestic stock funds have made a profit, the remaining 99% have lost.
Hong Kong’s SCMP reported on October 31 that, according to data from analysis firm East Money Information, only 1% – equivalent to 22 out of 2,296 stock investment funds in China – survived in the first 10 months of this year. Their return of investment ranges from 0.1% to 26%.
Meanwhile, the remaining 99% have collapsed. About 50 of the worst performing funds lost between 37% and 45% of their investments.
This year, the CSI 300 index of mainland stocks lost about 28%. China’s stock market plunge cost fund investors an estimated $3.6 trillion in corporate capitalization.
The Shanghai Securities Journal reported on October 27 that 2,296 stock market-focused mutual funds suffered a loss of $48.61 billion in the third quarter – an average drop of about 6.5%. These funds currently manage about $317.60 billion in assets.
Patrick Pan, Chief China Equity Strategist at Daiwa Capital Markets (Hong Kong) said, “The downtrend has spread to almost every sector and equities trading is now extremely volatile.”
According to data from Oriental Wealth Management, a $11.9 million fund managed by ICBC Credit Suisse has allocated more than half of its portfolio to Hong Kong-listed stocks such as Meituan and Tencent but lost 43.5% this year.
China’s economy is pessimistic, foreign investors continue to sell yuan-denominated bonds
According to statistics from the Wall Street Journal, the total number of bonds and other debt issued by the Chinese regime that investors hold decreased to $469.49 billion in September, the lowest level since December 2020.
The yuan devaluation comes as foreign investors dump billions of dollars in Chinese bonds, reflecting continued pessimism over the Chinese economic outlook and the yuan.
The yuan has fallen more than 12% against the dollar this year in the Chinese regime’s tightly controlled domestic market, while overseas markets are more freely traded. In September, the yuan fell below 7 yuan on the dollar and continued to depreciate against the dollar in October. This has reduced the international appeal of the yuan.