June 1 Reuters Foreign investors39; selling of Chinese shares gained some momentum in May, as flagging domestic demand and expectations for weak corporate earnings led to steep falls on mainland and Hong Kong stock markets.

Refinitiv data shows foreigners sold 1.71 billion worth of mainland shares this month via Stock Connect, a key crossborder link between the mainland and Hong Kong exchanges, after selling 659 million in April.

The selling marks a slow reversal of their heavy investment totaling 20.92 billion in January when China reopened its economy after three years of COVID restrictions, spurring a wave of bullish expectations for growth.

Such hopes were dashed as domestic and overseas demand wilted, and the recovery proved uneven. According to data from the National Bureau of Statistics, profits at China39;s industrial firms slumped in the first four months of the year.

Despite outflows in February, April and May, foreigners39; net purchases of mainland shares still stood at 25.05 billion for the first five months of this year, compared with net buying of about 6.36 billion worth over the whole of 2022.

China39;s manufacturing activity contracted more than expected in May, according to the official purchasing managers39; index PMI survey released on Wednesday. Though a private sector survey, the CaixinSP Global manufacturing PMI released on Thursday, showed China39;s factory activity unexpectedly swung to growth in May from decline.

In April, imports…