Global long-only funds offloaded China equities at the fastest pace of 2023 in December as they rushed to meet redemption requests and to diversify away from the world’s second-largest economy, according to Morgan Stanley analysts, reports Reuters. China and Hong Kong equities saw a combined net outflow of $3.8 billion from active long-only managers last month, the worst month in 2023 and the third-largest monthly outflow on record, Morgan Stanley’s quantitative research team said in a report released to clients on Tuesday.
“Both investors’ redemptions from equity funds and portfolio managers’ rebalancing to deepen underweight on China contributed to the outflows,” the analysts led by Gilbert Wong said.
China and Hong Kong stocks ended 2023 as the worst performers among the world’s major indexes, dragged down by geopolitical risks, a sluggish economic recovery and policy uncertainties.