CHINESE investors are swapping their bets in equities for safe-haven money market funds (MMFs) as stock markets continue to be volatile on the back of concerns about domestic policy tightening and Sino-U.S. tensions.

The trend marks a reversal in the risk-seeking behavior seen during the March-June period and has caused the country’s blue-chip index to pull back from its highest in more than five years.

MMFs are traditionally considered low-risk and liquid as they normally invest in high-quality assets, including government bonds, and yield is closely related to general cash conditions in the financial system.

Hwabao Tianyi ETF, the largest money market ETF listed on the Shanghai Stock Exchange, saw its total units increase 35.6 percent to 968 million Aug. 3, from 714 million July 13 when the CSI300 blue-chip index started to retreat from its five-year high.

Huatai-PB CSI 300 ETF, the largest ETF tracking the blue-chip CSI300 index, saw its total units decrease 17.9 percent to 7.8 billion Aug. 3, from 9.5 billion July 13.

“Some investors, in particular those heavily leveraged, want to exit the stock market for the moment given the big uncertainties around the Sino-U.S. tensions, and park their money in the money market funds,” said Zhang Chengyu, vice general manager of Beijing-based Shiji Hongfan Asset Management Co.

China’s major indexes saw two sessions of big plunges July 16 and July 24, as worries mounted over policy tightening, following better-than-expected GDP data in the second quarter, and over escalating Sino-U.S. tensions. (SD-Agencies)