China stocks tumble as Xi’s team fans economic concern; yuan weakens

Hong Kong stocks tumble as Xi appointments fan economic fears; yuan weakens By Reuters

Breaking News

More

 

Sign In/Free Sign Up

 

0

‘;

Economy 3 hours ago (Oct 24, 2022 01:40AM ET)

2/2
(C) Reuters. FILE PHOTO: People walk past a screen displaying the Hang Seng stock index at Central district, in Hong Kong, China July 19, 2022. REUTERS/Lam Yik
2/2

By Xie Yu and Summer Zhen

HONG KONG (Reuters) -Hong Kong stocks slid to 13-year lows on Monday and onshore yuan fell to its weakest level in 15 years after Xi Jinping’s newly unveiled leadership team heightened fears that economic growth will be sacrificed for ideology-driven policies.

The Hang Seng index slumped 5% in early afternoon trade, touching levels last seen during the 2008-2009 global financial crisis.

Hong Kong-listed shares of tech giants Alibaba (NYSE:BABA) Group Holding Ltd and Tencent Holdings (OTC:TCEHY) Ltd plunged 10% and 8% respectively, dragging the Hang Seng Tech Index down 7% to a record low. Hong Kong-listed Chinese developers plummeted 9% to record lows.

Both the property and tech sectors have been targeted for far greater regulation under Xi.

Xi secured a precedent-breaking third leadership term on Sunday and introduced the new Politburo Standing Committee stacked with loyalists.

The appointments “show China moving from economic pragmatism to political ideology,” said Ales Koutny, emerging markets portfolio manager at Janus Henderson Investors.

“The message here is clear: COVID Zero lockdowns, shared prosperity agenda and sectorial crackdowns are not going anywhere,” he said, adding that he believed these risks would limit China’s annual economic growth to just 2-3%.

China’s gross domestic product (GDP) rose 3.9% in the July-September quarter year-on-year, official data showed on Monday, rebounding at a faster-than-expected pace but that was not enough to cheer investors.

FOREIGN OUTFLOWS

Stocks declines were more moderate for mainland markets which are less vulnerable to foreign selling and were bolstered by a surge in Chinese defence-related stocks as investors bet geopolitical tensions, particularly over Taiwan, will intensify.

China’s bluechip CSI300 index lost 2.3%, while the Shanghai Composite Index lost 1.4%.

Onshore yuan fell to its weakest level in 15 years. Offshore yuan, in which trade began from 2011, slipped to as low as 7.2790 per dollar, near its record low.

The cross-border China-Hong Kong Stock Connect saw a net outflow of roughly 9.2 billion yuan ($1.3 billion) on Monday morning.

“The short-term negative factor remains China’s extremely harsh COVID policies, which have hit foreign investors’ confidence toward China,” said Yuan Yuwei, fund manager at hedge fund house Water Wisdom Asset Management.

Ravaged by China’s zero-COVID policy, which seeks to stamp out all outbreaks and has resulted in frequent lockdowns, sectors such as tourism, leisure as well as hotel and catering saw steep declines.

COMMON PROSPERITY

During the Communist Party’s 20th Congress, Xi reaffirmed his Common Prosperity drive, vowing to distribute income more fairly, and “standardise wealth accumulation mechanisms.”

He also emphasised national security, saying China should secure supply chains, sufficient grains and energy as well as work towards technological self-reliance.

An amendment to the Communist Party’s constitution enshrined “developing fighting spirit, strengthening fighting ability”, while a call to oppose and deter forces seeking independence for Taiwan was also included for the first time.

With investors dumping internet companies and property developers, some of those funds were re-directed into chipmakers, high-end equipment producers and defence stocks.

Minyue Liu, Greater China investment specialist at BNP Paribas (OTC:BNPQY) Asset Management, said that her portfolio has reduced its exposure to stocks vulnerable to an increase geopolitical risks, favouring instead shares related to tech innovation, industrial upgrades and energy transition.

Some investors are less pessimistic, arguing China’s new leadership team is well aware of the importance of economic growth.

“I think that there’s growing consensus among policymakers, that one priority should be to make the economic cake bigger, through quality growth,” said Mark Dong, general manager of Minority Asset Management (Hong Kong).

($1 = 7.2535 Chinese yuan)

Hong Kong stocks tumble as Xi appointments fan economic fears; yuan weakens

French court approves Credit Suisse 238 million euro settlement agreement in tax caseBy Reuters – Oct 24, 2022

PARIS (Reuters) – A French court approved an agreement between Credit Suisse Group and the French financial prosecution office to settle a tax fraud and money laundering case in…

 

Dollar shrugs off suspected yen intervention, Europe clings to Fed hopesBy Reuters – Oct 24, 2022

By Wayne Cole and Amanda Cooper LONDON/SYDNEY (Reuters) – The dollar weathered another suspected blast of Japanese intervention to rise against the yen on Monday, while European…

 

Goldman Sachs launches Chinese infrastructure real estate joint ventureBy Reuters – Oct 24, 2022

By Selena Li HONG KONG (Reuters) – Goldman Sachs (NYSE:GS) has launched a joint venture in China with local logistics company Sunjade in a bid to boost investment in Chinese…

Trade With A Regulated Broker

 

Our Apps

 

Terms And Conditions
Privacy Policy
Risk Warning

(C) 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

 

(Visited 1 times, 1 visits today)

Leave A Comment

Your email address will not be published. Required fields are marked *