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a major shift in foreign investment.

the indian stock market suddenly suffered a big sell-off, and global funds' net sales of indian stocks hit a record high. the latest data shows that last week (september 30 to october 4), foreign institutional investors sold about us$4.5 billion (approximately rmb 31.6 billion) of indian stocks, which was the largest single week in the history of the indian stock market. sell off.

affected by this, the indian stock market continued to fall, with the indian nifty 50 index falling 4.45% last week, the worst weekly performance since june 2022. analysts believe that the escalating geopolitical situation, sharp rise in crude oil prices, global interest rate trends, and improving performance of the chinese market are the main reasons for the recent withdrawal of foreign capital from the indian stock market.

the current hot topic in the market is: will the foreign investment withdrawing from india flow to the chinese market? nikhilesh kasi, a trader at goldman sachs in india, said that the question most asked by clients in the past two weeks is "do we see funds flowing from india to china?" to this, kasi clearly answered: "yes, there is clear evidence that funds are flowing from india to china. ".

sell ​​hard

the latest data shows that last week (september 30 to october 4), foreign institutional investors sold about us$4.5 billion (approximately rmb 31.6 billion) of indian stocks, which was the largest single week in the history of the indian stock market. sell off.

this was staged with only 4 trading days, of which october 2 was a non-trading day.

data from the securities and exchange board of india show that global funds sold a net us$101.7 million of indian bonds on october 3; according to exchange data, global funds sold a net us$1.85 billion (approximately rmb 13 billion) of indian stocks on october 3. record high level.

according to data, between october 1 and 4, foreign capital withdrew a net 271.42 billion rupees (approximately rmb 22.7 billion) from the indian stock market.

large-scale selling by foreign capital has caused the indian stock market to continue to fall. last friday (october 4), india's nifty 50 index closed down 0.93% at 25014.60 points. the cumulative decline last week (four trading days, closed on october 2) it reached 4.45%, the worst weekly performance since june 2022.

on october 7, india's sensex 30 index weakened again. as of the close, the decline was 0.78%, closing at 81,050 points. compared with the previous high, the cumulative decline reached 5.73%.

analysts believe that the escalating geopolitical situation, sharp rise in crude oil prices, global interest rate trends, and improving performance of the chinese market are the main reasons for the recent withdrawal of foreign capital from the indian stock market.

moneycontrol's latest market survey shows that multiple concerns have affected investor sentiment, leading to increased volatility in the indian stock market. the biggest risk facing the indian market is high valuations, followed by disappointing earnings and geopolitical risks. in addition, moneycontrol's poll also listed "china-india rebalancing" as one of the key risks for respondents' voting.

geojit financial services analyst vk vijayakumar said the sell-off was mainly triggered by the outperformance of chinese stocks and the bullish sentiment is expected to continue. chinese stocks are trading at very low valuations, and the economy is expected to perform well under the latest monetary and fiscal policies.

from an industry level, foreign investment mainly sold indian financial stocks, especially high-quality bank stocks.

so far this year, foreign funds have invested rs 73,468 crore in the indian stock market and rs 110 million in the bond market. analysts said that geopolitical developments and future global interest rate trends will be the key to determining the flow of foreign capital in the indian stock market.

india has lost its position as the largest foreign inflow market among emerging markets due to last week's sharp sell-off. bloomberg data shows that south korea has become the market with the largest inflows of foreign capital in 2024, with inflows reaching us$10.3 billion so far this year. in contrast, india's foreign capital inflows have declined to $8.6 billion.

sell ​​india, buy china?

the current hot topic in the market is: will the foreign investment withdrawing from india flow to the chinese market?

nikhilesh kasi, india trader at goldman sachs, said the most asked question from clients in the past two weeks was "are we seeing money flowing from india to china?"

to this, kasi clearly answered: "yes." and explained that based on the capital flows they saw, there was clear evidence that money was flowing from india to china.

kasi said indian stocks are the second most overweighted among emerging markets. what's more, india has the second-largest weight among all emerging markets.

kasi believes that foreign institutional investors are selling their most owned and most liquid assets in order to extract maximum liquidity in the shortest time. this means that when there is a large amount of foreign investment in the chinese market, the indian market will become vulnerable.

he also said that the selling intensity of goldman sachs clients was twice as strong as before, and this process was mainly led by unilateral long strategy funds (lo).

reuters also analyzed that international oil price risks, india's currency tightening, suppression of stock derivatives transactions, and china's economic stimulus measures have all prompted foreign investors to leave india and turn to china's capital market, which was previously undervalued but has continued to have good prospects.

data from bank of america securities shows that in the past two weeks, bull funds bought a net us$3.4 billion in chinese stocks. bank of america securities released a report on october 4 in response to eight major questions from clients about chinese assets. it stated that a large amount of funds have recently poured into chinese stocks in an attempt to get in before the opening of a-shares. it is not yet clear whether funds have filled the underweight gap. .

according to epfr capital data tracked by cicc, as of october 2, overseas active capital outflows turned into net inflows for the first time after 65 consecutive weeks, and passive capital inflows accelerated significantly.

at the same time, chinese etf assets listed overseas are also highly sought after by funds. data from the etf tracking website (etf.com) shows that in the week ending october 3, the kraneshares china overseas internet etf (kweb) received net purchases of more than us$1.4 billion, and the ishares china large cap etf (fxi) received net purchases of funds were us$1.251 billion. china’s etf ranks among the top five net fund inflows, something that has rarely happened in the past three years.

branden ahern, cio of kweb's publisher, american kingsoft fund, said on october 3 that there is still room for growth in chinese stocks.

"we are cutting long positions across asia to fund purchases of chinese stocks," said eric yee, senior portfolio manager at atlantis investment management in singapore.