Chinese stocks plunge to lowest levels in years
On Monday, both Mainland China’s CSI 300 stock index and Hong Kong’s Hang Seng Index experienced significant drops, closing at their lowest points in nearly five years and close to their lowest closing levels since 2009, respectively.
Investors are growing increasingly concerned about the state of the economy, especially as major stock indexes in both mainland China and Hong Kong have been on a downward trend for several years. The start of the current year has only added to these worries, with the Hang Seng Index falling by 12% in 2024, earning the undesirable title of Asia’s worst-performing major index according to FactSet.
The situation is not much better for the Shanghai Composite Index, which experienced a more than 7% drop in January, making it the worst month for the index since early 2022. Foreign investors have also shown their concern, withdrawing a significant $4.2 billion from mainland stock markets this year through a stock connect mechanism, compared with an inflow of $15.7 billion in the same period last year, according to Wind data.
This worrying trend in Chinese stock markets is also reflected in U.S.-listed Chinese stocks, with the Nasdaq Golden Dragon China Index down by 14% in 2024.
Other Asian stock markets were mixed on Monday, with Japan’s Nikkei 225 managing to hit another multi-decade high and closing up by 1.6%, but overall the moves were mostly muted.
The sharp decline in Chinese stocks is a clear indicator of the growing concern among investors about the future of the economy. It remains to be seen if any measures will be taken to stabilize the situation and restore confidence in the market.