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China out in the cold for foreign investors

Sentiment towards the country’s stock markets has become increasingly pessimistic

Investors generally agree that the dark clouds building over the US economy and the apparent cooling of the rush to buy whizz-bang tech stocks are painful on the one hand, but great news for some previously overlooked companies and for markets outside the US on the other.

The shift has encouraged investors to take another look at Europe, the UK, Japan and other markets. But one market that is not on the global shopping list for this so-called broadening trade, nowhere close to it in fact, is China.

US stocks have come off the boil, for sure. But in the year so far, the benchmark S&P 500 index is still up by 18 per cent. China, meanwhile, is in a deep hole. The CSI 300 index has fallen by about 7 per cent this year. The pain is not confined to Chinese markets, however. Take a look around at all the European stocks that are treated as proxies for the Chinese economy, particularly in luxury, and it is pretty grim out there.

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