- Chinese stocks have wiped out all their gains since the country reopened its economy.
- The CSI 300 index slipped on Friday and briefly fell below the October 2022 low.
- Investors are worried about the economic headwinds Beijing is currently facing.
Chinese stocks have wiped out all their gains since Beijing ended its zero-COVID policy, a sign that investors are still troubled by the ongoing property crisis and other headwinds facing the economy.Thank you for reading this post, don't forget to subscribe!
The CSI 300 index closed 0.7% lower at 3,510 on Friday, representing a 16% decline since the index peaked in late January.
At one point during Friday’s trading session, the index slipped and was trading around 3,502. That’s lower than when Chinese stocks fell last October, just before the country announced it would begin rolling back its strict lockdown measures.
The losses come amid China’s so-far disappointing economic recovery, which has been hit this year by poor consumer demand, rising trade tensions with the US and turmoil in its property sector, where the mounting debt of last years is now being wiped out. Have been. ,
These headwinds have been exacerbated by the recent conflict in the Middle East, with the Israel-Hamas war triggering a selloff in Chinese and Hong Kong listed stocks as investors are concerned about potential spillover effects.
In the past week alone, foreign investors plunged a net 24 billion yuan, or $3.3 billion, into onshore Chinese stocks, the most since mid-August, according to Bloomberg.
The market fell after international investors pulled a record $12.3 billion from onshore stocks in August.
China has rushed to stem the bleeding from its equity markets. Last weekend, regulators said they would step up their surveillance on “various arbitrage activities” taking place in the market.
And on October 30, regulators will crack down on stock speculation by requiring hedge funds to keep 100% of the value of trades in their accounts, while other short-sellers will be required to keep at least 80%.
Meanwhile, policymakers are easing financial conditions to stimulate the economy. China’s central bank injected about $113 billion of short-term policy loans into its banking system on Friday. Earlier this week it had already injected $85 billion of short-term loans and $107 billion of medium-term loans into the banking system.
Still, experts are warning of a grim future for China as it grapples with a number of economic headwinds. According to market veteran Ruchir Sharma, the country is possibly heading towards a full-blown financial crisis, while others have warned of a “lost decade” of economic stability ahead.