Chinese stocks in US skid to lowest in more than nine years

CHINESE stocks listed in the US tumbled Wednesday (Oct 19) as concerns over the nation’s economic outlook and a rise of Covid cases in the middle of the twice-a-decade party congress weighed on investor sentiment.

The Nasdaq Golden Dragon China Index sank 7.1 per cent, its steepest one-day decline since May 9, putting the gauge at its lowest closing level in more than nine years. The index has erased all its gains since mid-March when Beijing announced a strong push to stabilise its markets.

Nio, Li Auto, Xpeng and Bilibili were among the worst performers, each sliding more than 10 per cent. Some of China’s largest tech companies listed in New York including Alibaba Group Holding, JD.com and Baidu also sank.

Wednesday’s selloff came after shares listed in China and Hong Kong dropped amid a rout in consumer stocks and concerns about the region’s earnings outlook. Adding to the wall of worry for investors was the surge in Beijing’s Covid cases to the highest in four months and the government’s unprecedented silence on key economic indicators. The Hang Seng Tech Index slumped 4.2 per cent overnight, to close near a record low level, as Hong Kong chief executive John Lee’s policy speech disappointed some investors.

The market’s sentiment remains fragile as President Xi Jinping holds the Communist Party Congress meeting, which is due end this week. China’s onshore yuan also slumped to record low Tuesday.

“Investors are disappointed that there wasn’t any signal of future relaxation of zero-Covid policies, and stronger support pledged for the real estate sector,” said Louis Lau, a portfolio manager at Brandes Investment.

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Chinese stocks listed in the US have been mired in tumult for a slew of reasons including escalating tensions between policymakers in Beijing and Washington that has led to delisting fears, a government clampdown on various industries including tech, the nation’s stringent Covid curbs and a slump in the property sector. The Nasdaq Golden Dragon China Index has dropped 75 per cent from its peak in February 2021.

The wild swings in the group also have lured bearish bets. Over the last 30 days, the market saw a 3.6 per cent increase, or US$635 million, in short selling for US-listed Chinese stocks, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners. BLOOMBERG