Xi will not be pleased… Unprecedented capital outflows from China…

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High-frequency data detected large portfolio outflows from Chinese stocks and bonds, even as flows to other emerging markets held up, the IIF wrote in a report Thursday.

“Outflows from China on the scale and intensity we are seeing are unprecedented, especially since we are not seeing similar outflows from the rest of emerging markets,” IIF chief economist Robin Brooks and his colleagues wrote. “The timing of outflows –- which built after Russia’s invasion of Ukraine — suggests foreign investors may be looking at China in a new light, though it is premature to draw any definitive conclusions in this regard.”

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Official data showed that foreign investors reduced their holdings of Chinese government bonds by the most on record in February, in part as the Russia-Ukraine war spurred redemptions among global fixed-income investors. Sanctions have frozen the Russian central bank’s foreign reserves held in euros and dollars, leading to speculation that Moscow may sell its holding of Chinese assets to raise funds.


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