Chinese stocks tumble to multi-year lows in New York and Hong Kong amid party congress


Hong Kong
CNN business

Chinese stocks hit multi-year lows in New York and Hong Kong amid growing concerns over China’s rising Covid cases and economic outlook.

The slump comes as members of the ruling Chinese Communist Party meet for the 20th Party Congress, a major leadership reshuffle that will set the tone for politics for years to come.

In Hong Kong, the benchmark index Hang Seng (HSI) fell as much as 3% during Thursday morning trading. By early afternoon, it pared losses to 1.1% and was on track to record its lowest close since October 2011, according to Refinitiv.

The case comes just a day after the city’s chairman, Chief Executive John Lee, vowed to invest billions of dollars to bring global talent and businesses back to Hong Kong.

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The index was mainly dragged down by Chinese technology companies. Hong Kong-listed Alibaba (BABA) shares fell nearly 3%. Tencent (TCEHY) also lost 2.9%. Baidu (BIDU) is down more than 7%.

The sharp drop followed a sharp sell-off in Chinese stocks listed on Wall Street overnight.

The Nasdaq Golden Dragon China Index slipped 7.1% on Wednesday, closing at its lowest level since July 2013. JD.com (JD) lost 7.7%. New York-traded Alibaba stock fell 6.6%.

US stocks ended lower on Wednesday, with the Dow Jones Industrial Average down 0.3%. The S&P 500 lost 0.6% and the Nasdaq 0.9%.

Other Asian markets also fell on Thursday.

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Japan’s nikkei 22 (N225)5 fell 0.9% as the Japanese yen hit a fresh 32-year low against the dollar.

South Korea’s Kospi fell 0.8%. Australia’s S&P/ASX 200 lost 1.1%. But China’s Shanghai Composite Index recouped earlier losses and edged up 0.3%.

Analysts are concerned about China’s growth prospects after Xi Jinping’s opening speech at the 20th party congress.

The Chinese leader gave no sign of turning away from the country’s rigid zero-Covid policy or its tough regulatory stance on various companies, both of which have hampered growth in the world’s second-largest economy.

Xi is expected to secure an unprecedented third term in power at the week-long congress.

“China’s National Party Congress failed to set a positive catalyst,” said Yeap Jun Rong, a market strategist at IG Group, on Thursday. He added that investors are also concerned that rising Covid cases in Beijing could lead to “aggressive containment measures”.

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China’s capital spotted 41 Covid cases on Tuesday, the most in four months, according to the city’s health commission.

The country delayed the release of its third-quarter GDP data on Tuesday, fueling further concerns.

“China’s decision to delay the release of key economic data may indicate that the data is so ugly that they don’t want it released during the convention,” said Edward Moya, Oanda’s senior market analyst for the Americas, in one Research note Wednesday.

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