China's cratering markets drive mainstay retail investors away
SINGAPORE (Reuters) -Small Chinese investors are scrambling even harder than foreigners to exit the country's crumbling stock markets, sending premiums on global index funds skyrocketing as they search for exposure to anything but the sputtering domestic economy.
«The logic is simple: stay away from all yuan assets,» said Rain Yang, a retail investor in southern Jiangxi province, who spent last year selling everything but his apartment in order to fund purchases of U.S. stocks, gold and cryptocurrencies.
World stocks went up 20% last year, gold rose 13% and bitcoin 155%. China's blue-chip CSI300 fell 11% and collapsed to a five-year low last week.
Promises of official government support have driven a mild bounce this week. But having heard it all before, long-suffering local investors look to be taking the reprieve as a window for escape — leaving a market which is traditionally largely driven by retail money precariously adrift.
Since China limits investment abroad under a quota scheme introduced in 2006, the qualified domestic institutional investor programme (QDII) and other official channels are jammed, and banned assets such as bitcoin are booming.
There are nearly 400 dollar-denominated wealth management products issued by Chinese banks and their units, according to data from China's banking regulator, and those are in heavy demand. In January alone, more than 131 outbound products have been issued, quadrupling from a year ago, the China Business News reported.
China announced a tripling for individual quotas to access overseas products in Hong Kong and Macau this week, after the wealth connect scheme saw a 12-fold increase in outbound investment last year to 4.9 billion yuan ($682.54 million).
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