Economics
China Stocks Adored Abroad as Local Investors See Losses Mount
- International investors remain bullish amid deleveraging focus
- MSCI China correlation with Shanghai Composite approaches zero
This article is for subscribers only.
Overseas investors are sticking with China’s stocks and bonds even as the country’s crackdown on leverage wipes almost $500 billion from the domestic market.
While the Shanghai Composite Index is close to an October low, the MSCI China Index -- composed almost entirely of Hong Kong and U.S. listings -- is holding on to this year’s 18 percent gain. The disconnect also applies to fixed income, with international funds owning the most sovereign debt on record and the extra cost that investors demand to hold Chinese companies’ dollar bonds over Treasuries near a decade-low.