In the first day of trading since Xi Jinping effectively secured ultimate power for life at the CCP 20th National Congress, Chinese stocks have crashed.
The Hang Seng Chinese Enterprise index is down 6.7 percent from Friday’s close, and in trading on Monday hit a low of 5,112 – the lowest level in this history of the Index which was launched in 2005.
The broader Hang Seng Index also feel sharply on Monday, down 6 percent to levels last seen during the 2008-2009 global financial crisis.
“This is a level of panic that appears inconsistent with recent developments. Not even stronger than expected econ numbers could stem the tide. But who can blame them? COVID Zero plus US tensions plus post National Party Congress uncertainties proving too much now,” said Brian Tycangco from Stansberry Research.
Chinese tech stocks the biggest losers
It was Chinese tech stocks that took the brunt of the panic selling on Monday. JD.com (HKG: 9618), Alibaba (HKG: 9988), Tencent (HKG: 0700), Baidu (HKG: 9888), Meituan (HKG: 3690), and NIO (HKG: 9866) all posted declines of greater than 10 percent.
On China’s mainland, the declines were less severe as foreign outflows have a smaller impact than on the more globally accessible Hong Kong exchange.
China’s CSI 300 Index, which tracks the top 300 stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, fell 2.5 percent.
Stock market falls despite growth beat
The Chinese stocks bloodbath came despite the Chinese National Bureau of Statistics releasing new data showing China’s GDP grew 3.9 percent in the third quarter of 2022 (year-on-year).
This was a sharp acceleration from the second quarter year-on-year growth of 0.4 percent.
The economic data, which beat consensus expectations, was supposed to be released during the National Congress last week. However, the release was postponed with no specific reason provided by officials.