China’s major onshore inventory indices suffered the worst quarter since the 2015 stock market crash. Their quarterly loss was recorded within the 11-18% range despite Beijing’s struggles to boost consumer confidence and keep the economy humming.

The CSI 300 index includes the top businesses listed in Shanghai and Shenzhen. As of March 31, it has lost roughly 15% for the first three months of 2022.

The 500-stock Shenzhen Component Index plunged 18%.

These figures present the largest quarterly percentage loss for both benchmarks since the third quarter of 2015.

The Shanghai Composite Index, which covers larger and less volatile public firms, dropped nearly 11%. This showed its worst performance since the fourth quarter of 2018.

Jason Liu, head of Asia for the chief investment office of Deutsche Bank, said that firms listed in mainland China tend to be more focused on sectors driven by the domestic economy than those listed in the U.S.

These companies operate in banking, consumer goods, and industrials.

China’s stringent control measures against the epidemic have harmed the country’s growth and consumer confidence.

Liu stated, “A lot of that has a very direct impact on industrial production, consumer spending, and all these very domestically oriented sectors, and I think people can feel that.”

Meanwhile, global commodity prices soared during the Russia-Ukraine war. This turbulence, in turn, hurt the profit margins of consumer goods firms such as brewers and bottled water producers.

Despite China’s recent efforts to facilitate funding access among property developers, its economically vital real estate market is still struggling.

Zhikai Chen, head of Asian equities at BNP Paribas Asset Management, said, “There is still a huge question mark that now we are here, what is the government going to do? We are now at a point where investors are basically saying, show us the money.”

Onshore stocks showed worse performance than their offshore counterparts. As of March 31, Hong Kong’s Hang Seng China Enterprises Index fell 8.6% during the first quarter of 2022.

Policymakers led by Vice Premier Liu He pledged in mid-March to pursue a more market-friendly approach. It aims to halt a sharp sell-off in offshore equities. Indices tracking U.S.-listed Chinese firms, such as the Nasdaq Golden Dragon China, recovered while onshore stocks witnessed a less pronounced rally.

Louis Lau, chief investment officer at Brandes Investment Partners in San Diego, said that Beijing provided neither substantial policy nor a strong enough stimulus package after Liu’s pledge.

Lau added, “I think it was a bit disappointing after Liu He spoke out.”

According to Wind statistics, foreign investors sold a net 45.1 billion yuan (7.1 billion dollars) of mainland Chinese stocks through the Stock Connect trading link in March. It was the third-largest outflow since the program started in 2014.

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