$20B Dumped in a Week: 9-Week Trend of Massive Capital Flight from US

By the last trading day before the Spring Festival, foreign capital had net bought A-shares for more than 110 billion yuan this month.

However, investors have been selling US stock funds for nine consecutive weeks, with a significant outflow of funds from the US market.

The US dollar index also fell to a new low, approaching the 101 level multiple times, and it is not ruled out that it will break through the 100 mark before and after the Federal Reserve's interest rate hike.

It seems that the US dollar is really not doing well, and even if it continues to raise interest rates, it will be difficult to rise again.

On the contrary, the performance of the Asian market is very good, and it is believed that in the near future, funds will continue to flow out of the United States and into Asia.

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In 2022, as the US dollar continued to raise interest rates and the US dollar index kept rising, there were indeed many funds that continued to flow into the US market.

But the US dollar gradually stopped rising, and by November, although the Federal Reserve was still raising interest rates, the US dollar index turned downward. As the US dollar continued to depreciate, funds also began to flee the US market at an increasingly fast pace.

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Data from US institutions show that in the most recent week, investors sold US stock funds for as high as 3.13 billion US dollars, equivalent to more than 20 billion yuan, marking the ninth consecutive week of net outflows.

Now, fund managers are still continuously reducing their holdings in US stocks, mainly focusing on the technology and pharmaceutical sectors.Additional data also indicates that currently, institutions' allocation to U.S. stocks is mostly "underweight," which is the lowest level since October 2005.

Although the U.S. dollar has been continuously appreciating over the past period, the main driving factor behind its appreciation is merely the continuous interest rate hikes, not the economic fundamentals.

As the fourth-quarter financial reports in the United States begin to be released, the impact of the Federal Reserve's tight monetary policy on businesses continues to expand. In addition to the unfavorable data seen in the reports, we are also witnessing an increasing number of companies cutting costs, controlling new hiring, and even laying off employees.

Recently, both Google and Microsoft have announced layoffs, affecting more than 10,000 employees each. This has led to the total number of employees dismissed in the technology sector reaching 55,000 so far this year, within less than a month.

Analysts believe that among the 500 listed companies in the S&P 500 for the fourth quarter of last year, profits fell by an average of 2.9%.

It is clear that the decline in U.S. stocks last year was mainly due to the Federal Reserve's interest rate hikes, and U.S. stocks will continue to decline this year, primarily due to the unfavorable operational data of companies.

The rise in the U.S. stock market at the beginning of this year exceeded expectations, but this could also lead to an unexpected significant drop.

Unfavorable economic data have caused the U.S. dollar to continue to decline, even with the support of interest rate hikes.Capital has been flowing out of the U.S. market for nine consecutive weeks, which is bad news for the United States.

Although last year, due to continuous interest rate hikes, the U.S. dollar appreciated, attracting a large amount of capital, the universal decline in dollar-denominated assets means that the funds flowing into the U.S. are always ready to exit.

Especially as the U.S. dollar began to depreciate and the Asian market showed a clear rebound, the momentum to attract capital fleeing from the U.S. is growing.

During the Lunar New Year, A-shares and Hong Kong stocks entered a rest period. However, the Asian market still rose generally, with the Japanese Nikkei index up 300 points on this Monday, and the Indian Bombay index also up more than 300 points.

Once the U.S. dollar starts to decline, the attractiveness of emerging markets to capital immediately emerges. It is estimated that in the coming period, the trend of capital flowing out of the U.S. and into the Asian market will become more and more apparent.

By the last trading day before the Spring Festival, the total amount of northward capital flowing into A-shares has exceeded 110 billion, surpassing the entire past year in less than a month.

The rise of the U.S. dollar has long reached its peak, and the downward trend continues.