The outlook for the global economy and financial markets has undergone significant changes since the outbreak of Covid-19 in early 2020. International capital flows in China's capital market also encountered short term fluctuations. By early May，it became apparent that the shocks to China's capital market from Covid-19 could be divided into two stages: the first began with the outbreak in late January followed by the center of the financial storm on February 3 when the stock market reopened after the Spring Festival. When the pandemic was brought under control in China in late February，there was a period of stability that concluded that phase of the crisis. The second stage started with the outbreak in Italy and other countries in late February. The asset price plunge in mid-March was the center of the financial storm in this stage. This too was followed by a period of stability. And we can see that the reasons behind the movements of international capital during these two stages were different.

First，cross-border capital fluctuations during the first stage were mainly due to the economic uncertainties in China. In late January，there were uncertainties over the main features of the virus，whether it was preventable or controllable，and what the impact would be on China's economy. Stocks are risky assets and investors tend to avoid uncertainties. It was the uncertainties linked to the Covid-19 pandemic that led foreign investors to cut holdings of Chinese stocks. When the price decline made the risks less pronounced and there were signs of the pandemic coming under control in China，funds gradually returned to the market. During this stage，the behavior of foreign investors，especially institutional investors，perfectly reflected the concept of value investment.

Next，fluctuations in cross-border capital flows in the second stage were caused mainly by the economic shocks in the US and the international economy coupled with the global "dollar shortage." During this stage，instead of China's domestic market and public health situation，foreign investors were more concerned with global factors. These mainly included the panic caused by the global spread of the coronavirus and the financial market panic and margin call requirements brought about by the fall in oil prices. At the same time there was a rise in global risk factors. On March 16，for instance，the S&P Volatility Index (VIX) was higher than it was at the peak of the 2008 financial crisis. Market fears of a severe global recession had risen sharply. There was a tightening of liquidity in the US financial market and other developed countries and this resulted in negative feedback such as the "dollar shortage" and a plunge in asset prices. The International Monetary Fund's Financial Stability Report said the outbreak of this coronavirus has dealt an unprecedented blow to global financial markets. At this stage，foreign investors were forced to sell highly liquid assets to make up for their lack of sufficient domestic dollar liquidity.

Financial markets of several emerging market economies experienced significant outflows of international capital. This led to steep declines in stock and bond markets as well as the exchange rate for their currencies in March. That meant that international factors had played a leading role in this financial shock. Research by the International Monetary Fund (IMF) shows that stock market indices in emerging market economies have fallen by an average of more than 20% since the outbreak of Covid-19. Commodity currencies such as the Argentine peso and the Brazilian real fell by more than 20% against the US dollar on average. Interest rates on dollar-denominated government bonds in emerging market economies had surged to the highest level since the 2008 financial crisis，with an average rise of over 700 basis points by mid-March. According to statistics of the IMF，emerging economies have sustained the greatest damage from the Covid-19 outbreak，and the outbreak has been the most severe shock to these economies since the 2008 crisis. From January 21 to the end of March，international capital outflows from the capital markets of emerging market economies exceeded US$100 billion，accounting for 0.4% of their combined GDP，far more than the 0.2% in 2008. Among them，emerging market economies in Asia (excluding China) suffered the biggest capital outflows - accounting for 0.93% of combined GDP. The figure was 0.5% in Latin America and 0.46% in Eastern Europe，the Middle East and Africa.