Still, foreign institution funds have flowed into China this year, as evidenced by the rebound in the Hang Seng Index, which gained 1,729 points from its January low, but has eased subsequently.
Policymakers and commentators such as George Yeo, former Minister of Foreign Affairs and visiting fellow at the Lee Kuan Yew School of Public Policy, may be bullish about China’s long-term prospects, but fund managers, private equity and investors, in general, are scratching their heads about the funds flows out of China.
The Chinese stock market — as represented by the Shanghai Composite Index and the Hang Seng Index, where around 70% of the stocks are China-based or owned by mainlanders — has underperformed global markets. Nonetheless, inflows of foreign direct investment (FDI) into China fell to US$72 billion in 2022, down from US$180 billion in 2013, based on IMF and World Bank data. On the other hand, outflows of FDI rose to US$149 billion in 2022, up from US$72 billion in 2013.
