Panic selling of Chinese stocks spread from Hong Kong to New York on Monday. Investors worried about an uncertain market under the new leadership team after the Chinese Communist Party (CCP) concluded its national congress a day earlier.
The Nasdaq Golden Dragon China Index, gauging major U.S.-listed Chinese firms in New Stock exchanges, fell as much as 20% during the trading session. The index dropped over 14% for the day.
According to Nikkei Asia, China’s e-commerce Pinduoduo plunged more than 24%, and Alibaba and JD.com were down 12.5% and 13%, respectively. In addition, electric car makers Li Auto, Nio, and Xpeng, were down by double digits.
In Hong Kong and mainland China, the stock index plunged sharply on Monday in response to Xi’s strengthening his power as party chief.
Hong Kong’s Hang Seng Index lost over 6%, falling to 15,180, reaching a 13-year low. Both Chinese tech giants Alibaba and Tencent fell over 11% as the technology index plunged more than 9.6%.
In mainland China, the CSI 300 index, which tracks the top 300 firms, lost 2.93%, while Shanghai’s SSE Composite Index fell 2.02%.
The better-than-expected GDP could not rescue China’s stock tumble on Monday, as investors were concerned that Xi’s pre-congress policies were in place.
Nikkei Asia cited a Bank of America report saying, “The new leadership indicates more concentration in [the] top decision-making procedure.” As a result, some investors may worry about the lack of checks and balances, and the risk [of] potential policy mistakes evolve [evolving] into significant shocks to the economy.”
The report adds: “The future of the “zero-COVID” policy remains an open-ended question. Now with power more concentrated at the top, this decision hinges even more on President Xi’s views.”