FOREIGN fund flows into Shanghai-listed shares via a stock connect program have dried up and may not revive until next year as investors digest higher U.S. interest rates.

    Analysts say investor appetite for mainland shares has been curbed by worries over China’s slowing economic growth as well as frequent interventions from regulators aimed at stabilizing the turbulent market in the past few months.

    The Shanghai-Hong Kong stock connect program’s northbound channel, via which foreign investors buy A shares, had seen daily net outflows for nearly a month until Wednesday, when there were mild inflows, the longest period of outflows since the program was launched a year ago.

    The aggregated utilized northbound quota has fallen to the lowest level in seven months last week, standing at around 120 billion yuan (US$18.80 billion), or about 40 percent of the total quota approved.

    Total outflows amounted to 24 billion yuan since Oct. 21.

    “It is in line with a global trend that funds have started to withdraw from emerging markets on the expectation that the United States will soon increase interest rates,” said Ben Kwong, chief operating officer at a securities firm KGI Asia.

    In the week ended Nov. 11, emerging market funds saw the second week of outflows at US$2.3 billion, according to statistics from Citi Research released Monday last week. Asia outflows broadened to US$1.6 billion, as China exchange traded funds (ETFs) continued to see outflows of US$720 million.

    “The overall sentiment in China’s stock market is quite weak now and its ability to attract funds has been greatly weakened,” said Du Changchun, an equity analyst at Northeast Securities. (SD-Agencies)