- Investors dumped a record $12 billion in Chinese stocks last month, according to JPMorgan.
- Meanwhile, a survey of money managers shows that many are flocking to US equities.
Investors dumped a record amount of Chinese stock last month, according to JPMorgan data.
Amid the barrage of headlines pointing to the dire state of China's economy, investors sold a record $12 billion worth of Chinese stocks in August, the bank's strategists said in a note on Wednesday.
"For now, our market view, based on earlier episodes, is not to catch the falling knife. We see Chinese equities as range-bound in 3Q and client feedback argues that they ought to cheapen more (a full standard deviation) to reflect the uncertainty, and only the would become interesting," the strategists added, though they acknowledged that Chinese stocks could improve over the fourth quarter if there's a better outlook on monetary policy.
In the meantime, investors appear to be pivoting into the US stock market. A Bank of America survey of 258 money managers found that investors were 22% underweight in US equities in August, but have already increased their exposure to be 7% overweight in US equities September.
Meanwhile, their exposure to emerging market stocks dropped in a "dramatic shift," the bank said.
That selloff has largely been fueled by China's economic woes, with the nation officially slipping into deflation this summer as consumer demand fails to rebound from the pandemic. The country is also saddled with hefty debt balances and an unraveling property sector, which have shaken confidence in the nation's investments.
A net 0% of investors believe that China's economy will improve over the next year, according to the Bank of America's survey. Some scholars have also floated that China could be headed for a lost decade, similar to Japan's trajectory in the 1990s.