WASHINGTON—The recent U.S.–China trade dispute has prompted the biggest capital outflow from Chinese equities in nearly four years. More than $6 billion of capital has fled China’s stock market since May 6, according to data compiled by the Institute of International Finance (IIF).
Tensions escalated between the United States and China when Trump wrote in a tweet on May 5 that he would increase tariffs on $200 billion Chinese goods to 25 percent from 10 percent. Trump accused Beijing of backtracking on its commitment to deliver structural reforms.
The dispute revealed the vulnerability of China’s stock market, with the Shanghai Stock Exchange Composite Index falling nearly 6 percent on May 6, the day after Trump’s tweet. The stocks haven’t recovered since then.
The total outflow from Chinese stocks by nonresidents since tensions escalated reached $6.2 billion, according to IIF, which has tracked capital movement in emerging market equities on a daily basis since 2010.
Trump’s tweet and the intensification of the trade conflict came as a big surprise to investors, according to Jonathan Fortun, an economist at IIF. read more