Chinese stocks tanked on Monday as China’s president Xi Jinping secured a third term as the country’s leader and stacked the country’s highest decision-making body with loyalists, fuelling investor's fears that the prioritization of national interests could curb economic growth.
By early afternoon, US-listed shares of e-commerce platforms Alibaba Group (NYSE:BABA) Holding Limited, JD.com Inc (NASDAQ:JD), and Pinduoduo Inc (NASDAQ:PDD) had fallen 14.4%, 13.8%, and 25.7%, respectively, while multimedia company Tencent Holdings (HKG:0700, OTC:TCEHY) Limited shed 14.7% and internet services provider Baidu Inc was down 15.2%.
Electric vehicle makers NIO Inc (NYSE:NIO) and XPeng Inc had fallen 17.5% and 14.1%, respectively.
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Hong Kong’s Hang Seng index closed on Monday down 6.4%, reaching lows not seen since the 2008 financial crisis.
Forex.com market analyst Fawad Razaqzada said China was struggling to restore confidence among investors.
“Xi’s zero-covid policy is what has hurt the economy so dearly in recent times,” he said. “Investors are worried that as a result of further, inevitable, flare-ups of the virus, more lockdowns will be announced, causing even more pain for the people and economy.”
Razaqzada continued: “Investors are also worried that because of Xi’s loyalists being concentrated at the top of the decision-making body, there is the potential for more policy mistakes that could cause severe damage to the future path of growth.”
Concern over China’s future overshadowed better-than-expected, third-quarter gross domestic product data released on Monday.
The world’s second-largest economy achieved 3.9% year-on-year growth, ahead of the 3.4% expected by Reuters analysts.
Contact the author at emily.jarvie@proactiveinvestors.com
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