SHANGHAISINGAPORE, June 21 Reuters A sliding yuan and extensive outflows of cash from the mainland into Hong Kong show China39;s domestic investors are shelving expectations for any immediate recovery in their home markets and fleeing to the closest betteryielding assets.

The yuan has dropped to sevenmonth lows this week, alongside a reversal in equity investment flows into China.

Analysts said Hong Kong39;s stockpile of yuan deposits has also grown as mainland investors use their limited offshore investment channels to seek higher yields and companies prepare to pay annual dividends, adding to the pressure on the currency.

Sentiment on China soured over the past month as the market has rallied ahead of improvement in macro data which continues to disappoint, said Gary Tan, a Singaporebased portfolio manager at Allspring Global Investments.

Tan, whose funds are underweight on Chinese stocks, said sentiment had come a long way from a time when mainland markets were considered uninvestible, however, and he expected that would improve further.

But investor patience has worn thin after months of waiting for authorities to roll out more stimulus, mainly to support a sinking property sector.

The Shanghai benchmark stock index rose 20 between early February and midMay but is down 6 since.

Foreigners who had returned to the market since February, after quitting in 2023, have turned sellers too this month, pulling out 33 billion yuan 4.54 billion via the northbound leg of…