China’s stocks and currency tumbled to the lowest level since the 2008 financial crisis in Hong Kong as the national congress of the Chinese Communist Party (CCP) concluded a day earlier, with Xi Jinping securing a third term.
Chinese leader Xi Jinping strengthens his power with another five-year term as the Party chief with loyalists, an unprecedented political move since Mao Zedong’s time.
According to Bloomberg, China’s yuan depreciated 0.7%, the weakest level in 14 years, with 7.2782 yuan per dollar on Monday.
Hong Kong’s Hang Sheng stock index fell below 16,000 points for the first time in over 13 years. The Hang Seng China Enterprises Index declined over 3% to the lowest level since 2008, even though China’s GDP data is better than expected. China’s benchmark CSI 300 Index also fell.
The Tech Index in Hong Kong plunged 6.7%, with Alibaba Group down to a record low of 9.8%, Tencent Holdings plummeting 8.3%, with Meituan falling 11%.
Investors raised their concerns as Xi defended his “zero-COVID” policy during the national congress last week and offered no stimulus for the ongoing real estate crisis.
In addition, according to the South China Morning Post, Xi has called for “regulating the mechanism of wealth accumulation.” It will lead to close monitoring of private capital and pushes Xi’s “common prosperity” drive to narrow down the wealth gap in the country.
Duncan Wrigley, the chief China economist at Pantheon Macroeconomics Ltd., told Bloomberg, “The more centralized power becomes, the more the risk of overzealous policy implementation based on directives from the top.”