One week after the Chinese Communist Party’s (CCP) congress concluded, China’s shares listed on the Hong Kong stock exchange slumped by nearly 9% in a historic rout.

A calculation from SOH shows that the Hang Seng China Enterprises Index plunged 8.8% over the past week.

It’s the worst drop for a week since the index was launched in 1994.

The Chinese shares traded in Hong Kong index also slipped to the lowest level since the global financial crisis of 2008, becoming one of the worst-performing gauges this year.

In mainland China, the stock market also fell but at a slower pace.

The CSI 300 Index was down 5.4% for the week, which was the worst performance in the past 15 months.

The Shanghai Composite and the Shenzhen Component ended the week at least 4% lower. Both benchmarks hit their lowest levels in six months.

The week’s heavy losses have shocked local and global investors.

The selloffs of Chinese stocks came after the CCP’s leadership gathering dashed hopes for more market-friendly policies. 

According to Trading Economics, markets fretted about Chinese leader Xi Jinping’s tightening grip on power and further state control on markets and the economy. 

Xi’s reiteration of his policies may lead to the continuation of strict COVID control measures, more sectorial crackdowns, and greater geopolitical tensions with the U.S.

Investors fled Chinese equities due to intensifying COVID restrictions in Chinese cities amid widening outbreaks.

Foreign investors dumped a record amount of mainland stocks during the week. 

According to Bloomberg, the market struggles to judge how long the rout will persist. 

Christina Woon is the investment director for Asia equities in Singapore. She said it’s hard to say how the selloff plays out, but a sustained recovery in investor confidence is still dependent on developments like changes to China’s “zero-COVID” policy.

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