Foreign Exchange Administration
What Drives Cross-Border Portfolio Flows?
来源:
2022 Issue 3
Authro: Gene MA, Phoebe FENG and Andrew LOEVINGER
Portfolio investment flow to China is a weathervane for China's financial health and global investor confidence. Chart 1 shows the capital flows via the Stock and Bond Connects in February-June. We studied the forces that drive China's net bond and equity flows. It shows that relative economic growth,bond yields,RMB exchange rate,market volatility,and index inclusion explain about 50% of the flows (Chart 2). Many other factors,such as policy and geopolitical risk,which are hard to quantify,are also behind the ebb and flow of portfolio investments.