Bounce After The Bloodbath? Here's What's Going On With China Stocks

Author: AJ Fabino | October 25, 2022 01:45pm

Tuesday saw a recovery in China stocks following the previous session's sell-off of Chinese assets by foreign investors who were concerned that President Xi Jinping's new leadership team would prioritize military might over economic growth.

The Shanghai Composite benchmark, which is the major index for China, is currently just above the 2,976-point plateau, reverting to levels from April of this year.

Double-digit drops were seen in major Chinese internet equities, including JD.com Inc. (NASDAQ:JD), Alibaba Group Holding Ltd. (NYSE:BABA) and Naspers Ltd. (OTC:NPSNY).

See Also: As Xi Jinping Wins A Historic Third Term, Prominent Economist Says 'Asymmetry,' Not 'Reciprocity' The Way To Deal With China

A Closer Look

Monday’s bloodbath came after the party's twice-decade leadership transition, Xi crammed the Politburo Standing Committee with six supporters, proving his undisputed control of the highest decision-making body.

Here's how certain stocks reacted:

• Alibaba fell 14.58%. and lost another 1.46% on Tuesday after falling almost 19% to a new 52-week low over the previous three days.
• JD.com fell 11.33% in the last few trading sessions
• Cape Town-based Naspers, the largest shareholder of Tencent Holdings Ltd. (OTC:TCEHY), had a 12% decline.
• Tencent Music Entertainment Group (NYSE:TME) had a 2% loss, reversing an earlier decline of 18%, and was still trading above all-time lows.
• Pinduoduo Inc (NASDAQ:PDD), another internet company, recovered 3.7% on Tuesday after plunging a staggering 34% on Monday.
• Over the past three days, the Hang Seng Index in Hong Kong has plunged 9.7% to its lowest levels since April 2009.

A slew of delayed economic statistics revealed a mixed third-quarter rebound in China, with rising unemployment and worse retail sales in September despite an uptick in GDP.

See Also: Xi Jinping's Rising Power Forces China's Wealthiest To Execute Fire Escape Plans

A significant risk factor undermining investor sentiment toward Chinese equities, the struggling real estate market, shrank for a fifth quarter, extending its deepest drop in history.

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Posted In: BABA JD NPSNY PDD TCEHY TME