The U.S.-listed shares of China-based companies took broad beating Monday, as China President Xi Jinping’s moves to consolidate power fueled fears that current policies that have led to a slowing economy will continue.
Chinese leader Xi was named over the weekend to a third, five-year term as general secretary, ignoring the custom of stepping down after two terms, as the Associated Press reported. Xi also dropped No. 2 leader Premier Li Keqiang, a proponent of market-style reform and private enterprise, from a seven-member Standing Committee in favor of stronger Xi allies.
That spooked investors already reeling from a slowing economy, amid fears over the current zero-COVID policy that has led to lockdowns, and uncertainty over whether the crackdown on technology companies will continue.
The iShares China Large-Cap exchange-traded fund
sank 10.1% in morning trading to the lowest price seen since November 2008.
That follows a 6.4% plunge in Hong Kong’s Hang Seng
to a 13-year low, while the Shanghai Composite
shed 2.0%. The Invesco Golden Dragon China ETF
which holds only U.S.-listed shares of companies headquartered in China, was pummeled for a 15.3% loss toward a 10-year low.
Also, while data showed that the Chinese economy grew more than expected in the third quarter, the pace of growth year to date remained well below the annual growth target. “The [growth] gap is due to China’s impossible COVID-zero mission, which has been confirmed and cemented with Xi’s third term in office,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Among the more-active China-based companies trading in the U.S., shares of electric vehicle maker Nio Inc.
plunged 18.1% toward the biggest one-day selloff since it tumbled 20.2% on Sept. 24, 2019. The stock was also headed for the first close below the $10 mark since July 2020.
Ecommerce giant Alibaba Group Holding Ltd.’s stock
dove 15.3%, and was trading at the lowest prices since February 2016.
Elsewhere, shares of Tencent Music Entertainment Group slid 14.2%, JD.com
slumped 17.1%, Pinduoduo Inc.
cratered 23.3%, iQiyi Inc.
lost 16.2%, Bilibili Inc.
plunged 16.4% and Baidu Inc.
gave up 16.7%.