Annual Trade Surplus for the First Time in 7 Years Possible
Vice Chairman Muger is Optimistic about the Chinese Economy
Last month, the amount of foreign capital that withdrew from the Chinese stock market hit a record high.
According to Bloomberg News on the 31st (local time), the foreign capital that left the Chinese stock market last month was 4.75 billion yuan (approximately $649 million), the highest monthly outflow ever. Foreign capital has shown a net outflow from the Chinese stock market for three consecutive months.
Despite the Chinese authorities’ all-out efforts to support the stock market, such as buying exchange-traded funds (ETFs) through national wealth funds, there were only three trading days last month when foreign capital showed a net purchase.
As a result, foreign investors have sold off a record 172 billion yuan (approximately $26.89 billion) worth of stocks in the Chinese stock market over the past three months. If the speed of foreign capital outflow continues to accelerate, there is a possibility that the stock market trend this year could record a negative. The last time the Chinese stock market showed a net outflow annually was in 2016, when the Shenzhen stock market opened for investment from Hong Kong.
However, it is not entirely gone that the Chinese stock market has room to rise. This is because some of China’s economic indicators improved last month, showing signs of a certain recovery, and there is an expectation that foreign capital could flow in due to the current low-price buying sentiment.
Charlie Munger, the vice chairman of Berkshire Hathaway, who is celebrated as a business partner of ‘Investment Genius’ Warren Buffet and an investment guru on par with him, also expressed an optimistic outlook on the Chinese economy.
According to MarketWatch on the day, Vice Chairman Munger said in a recent podcast interview with ‘Acquirer’ about the outlook for the Chinese economy, “It has a better outlook than most other large economies over the next 20 years.”
In particular, regarding investment in Chinese stocks, Vice Chairman Munger pointed out, “China’s leading companies are strong and, in fact, better than any other companies, and (their stocks) are cheap.”
Vice Chairman Munger owns a stake in BYD, China’s largest electric vehicle company.
By. Lee Ji Won
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