(Reuters) – After selling Chinese shares in March, overseas investors increased their sales of Chinese shares, citing growing concerns about the effects of COVID-19 lockdowns and growth, as well as the consequences of the Ukraine-Russia conflict.

According to data from Refinitiv Eikon, the Hong Kong stock market and Refinitiv Eikon, Chinese investors have already sold $1.01 Billion worth of Chinese stocks via Hong Kong’s stock-connect program. This is after they had made $7.1 billion last March.

Chinese shares dropped almost 5% since April as a result of strict COVID lockdowns implemented in Shanghai and in other large cities. This has paralysed economic activity.

China’s stockmarkets have been the worst performing after Russia, with large- and medium-cap stocks falling around 20%.

Graphic: Foreign flows into Chinese stocks via Stock Connect, https://fingfx.thomsonreuters.com/gfx/mkt/myvmnyggzpr/Foreign%20flows%20into%20Chinese%20stocks%20via%20Stock%20Connect.jpg

China’s highest securities regulator stated Thursday that the economy is healthy in spite of many challenges. He asked institutional investors for more equity investments to limit market volatility and aid economic restructuring.

Manager of assets Schroders (LON) stated that the Chinese equity markets valuations are now at the same level as the lows of March 2020 and December 2018. These were when COVID began, and when U.S.-China tensions were rising.

“Amidst all uncertainties and the risk factors, patience is essential. The strong domestic investor base could make A-shares more resilient. These investors are also better positioned for greater policy ease. Due to the rapid drop in the yuan and a rise in U.S. Treasury yields, bond investors have remained off the edge. [CNY/]. Through Hong Kong’s Bond Connect last month, investors outside China sold Chinese bonds totaling $17.7billion. This was the largest outflow since Aug. 2017.

Graphic: Foreign flows into Chinese bonds via Stock Connect, https://fingfx.thomsonreuters.com/gfx/mkt/dwvkryaempm/Foreign%20flows%20into%20Chinese%20bonds%20via%20Stock%20Connect.jpg

Foreign holdings of Chinese bonds stood at $3.57 billion at March end, the lowest in five months, data from China Central Depository & Clearing Co (CCDC) showed.

Graphic: Chinese 10-yr benchmark yield vs U.S. 10-yr treasury yield, https://fingfx.thomsonreuters.com/gfx/mkt/znpnemzldvl/Chinese%2010-yr%20benchmark%20yield%20vs%20U.S.%2010-yr%20treasury%20yield.jpg

According to Duncan Tan (strategier at DBS Bank), “Chinese government bond(CGBs) will likely see foreign holdings decrease in the coming month as the CGBs yield advantage has vanished alongside this year’s selloff of global bonds, and expectations for aggressive rate cuts from PBOC have now fallen,”

“Global bond investors may consider CGBs outperformance to be lower in the future.”

Graphic: Foreign holdings in Chinese bonds, https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkmewzpx/Foreign%20holdings%20in%20Chinese%20bonds.jpg