EM funds continue to cut China exposure- JPMorgan

Emerging market funds continued to cut exposure to China amid persistent doubts over an economic recovery in the country, JPMorgan said, as outflows from Chinese equities continued. 

Underweight positions on China were at their highest since December 2021, JPM said, while fund flow data showed outflows totalling $8.5 billion from Chinese stocks so far this year. 

Meidan EM fund allocation to China was 1.1% below the benchmark, JPM noted. 

The trend comes following a slew of underwhelming economic readings from China over the past two months, which further undermined long positions on the country. Chinese stocks also largely struggled to keep up with their Asian peers as the region was rattled by a hawkish Bank of Japan and renewed concerns over a U.S. recession.

A recent note from Alpine Macro showed that China’s economy remained in dire straits, with government efforts at stimulating growth also having limited effects. Slowing private consumption, capital spending and a persistent deflationary trend were the biggest weights on the economy, as was a protracted slowdown in the country’s property market. 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were both languishing at more than six-month lows. But Hong Kong’s Hang Seng index fared much better, hovering just below a five-week high as it benefited from bargain buying into Chinese internet heavyweights. 

Source: Investing.com