Reflation, Rotation, Hot Money, Cold Feet, Let’s Call the Whole Thing Off
Foreign investors were behind a $408 billion flood of investment into China’s stocks and bonds last year. Now they’re having buyer’s remorse.
Beijing likes to burst bubbles.
Photographer: NICOLAS ASFOURI/AFPA lot of speculative capital, so-called hot money, has flowed into China lately. Last year, foreigners — lured by Beijing’s successful Covid-19 containment and swift economic recovery — snatched up a record $408 billion worth of the country’s bonds and stocks. It was also a bet that U.S.-China geopolitical tensions would ease as Donald Trump’s second bid for the White House faltered. The yuan rose as much as 10% against the greenback as foreign portfolio managers advocated a “buy China” thesis.
All that hot money has got Beijing hot and bothered. Just a week ago, Guo Shuqing, China’s banking czar, warned of asset bubbles abroad and at home. And in the last couple of days, the National People’s Congress announced a conservative economic agenda, which has tamped down the country’s frenetic bourses.
Now, the investing stratagem is getting a big shake-up.