Archive · 18 Jan 2026
Foreign Investors Retreat from China and India
Foreign investors are pulling money out of both China and India.
In China, this has been happening since after the Covid-19 pandemic and is getting worse because of trade issues and fears about China's economy.
China's economy is not growing as fast as the government hoped, and there are concerns about the reliability of official statistics.
The property market in China is also struggling, which is making things worse.
In India, foreign investors are selling stocks because of delays in a trade deal with the US and additional tariff threats.
However, domestic investors in India are buying stocks, which is helping to support the market.
The stock market in India is also showing signs of recovery, with some stocks doing well despite these challenges.
Foreign direct investment (FDI) flows to China are declining more sharply than to other emerging markets.
Trade diversion and financial decoupling trends indicate China is facing economic challenges.
Foreign portfolio and other investment flows into China are also on the decline.
China's real GDP growth in 2025 is expected to be 2.5-3%, below the government's 5% target.
The decline in fixed asset and property investment is dragging down broader capital formation in China.
Foreign portfolio investors (FPIs) have withdrawn ₹22,500 crore from the Indian stock market in January 2026.
Domestic institutional investors (DIIs) in India have purchased ₹34,076 crore worth of local stocks in January 2026.
The Nifty 50 index has a year-to-date return of -1.73% in 2026.
The Nifty 50 index returned 10% in 2025 despite massive DII investments and FII selling.
The Indian stock market is showing signs of recovery, with strong performances in select IT and banking stocks.
- Who
- Foreign investors, China, India, emerging markets
- What
- Retreat of foreign direct investment from China and India
- When
- Trend predates 2024 tariffs, emerged post-Covid-19
- Where
- China, India, emerging markets
- Why
- Financial decoupling, trade diversion, economic concerns, geopolitical risks, delayed trade deals, tariff threats
- FDI Flows
- Declining more precipitously in China than other emerging markets
- Trade Diversion
- Massive scale of trade diversion pushing China into deflation
- Foreign Portfolio Flows
- Decline in flows into Chinese stocks and bonds
- Other Investment Flows
- Decline in bank-intermediated flows like trade finance and cross-border loans
- China's Real GDP Growth (2025)
- Expected to be 2.5-3%, below government's 5% target
- Fixed Asset Investment
- Turned negative by mid-2025
- Property Sector Investment
- Collapse in investment dragging down broader capital formation
- FPI Selling in India
- ₹22,500 crore withdrawn in January 2026
- DII Purchases in India
- ₹34,076 crore purchased in January 2026
- Nifty 50 YTD Return
- -1.73%
- Nifty 50 2025 Return
- 10%
- DII Investments in India (2025)
- ₹7.44 lakh crore
- FII Selling in India (2025)
- ₹1.66 lakh crore
Sources
Foreign investors retreat from China, move to emerging markets
FPIs selling in Indian stock market continues; ₹22,500 crore withdrawn in January so far
Buy or sell: Ganesh Dongre recommends three stocks to buy on Monday — 19 January 2026
Foreign investors hit sell button again, pull out Rs 22,530 crore in January: What’s driving the exit?
