China to Switch Off Live Feed of Foreign Flows for Stocks in Bid to Boost Confidence
In a move aimed at bolstering market confidence, China is set to turn off a live feed of foreign flows for stocks as early as Monday. The Shanghai and Shenzhen exchanges will cease displaying real-time figures on purchases or sales of local stocks through trading links with Hong Kong, instead providing turnover details on a daily basis.
The decision, announced on April 12, is seen as an attempt to limit the impact of data showing foreign funds selling on market sentiment. Chinese shares have rallied since the announcement, with investors focusing on positive catalysts such as attractive valuations and government efforts to ease a housing crisis.
While some funds may be affected by the lack of real-time data, fund manager Chen Shi believes that value investors will not be significantly impacted. Intraday readings showing foreign outflows were blamed for worsening sentiment among Chinese retail investors during selloffs over the past year, prompting calls to obscure such figures.
The Chinese stock market has seen a rebound since February, supported by rescue measures and signs of economic recovery. Northbound investors delivered a third straight month of buying in April, with overseas funds adding back more than half of what they had sold since August.
Despite geopolitical tensions, global investors’ presence in China’s stock market remains small. The upcoming loss of live northbound data has not deterred Chinese investors, with the benchmark CSI 300 Index rising more than 5% since the announcement.
Chief investment officer Yang Bo believes ending the live feed of foreign flows will help avoid volatility and benefit the market’s long-term development. The move is seen as aligning with international practices and could lead to a more stable market environment.
With the changes set to take effect soon, the Chinese stock market is poised for further developments as investors adapt to the new data reporting system.
