Shares Slumped To Their Lowest Levels Since July 2016

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China stocks closed at a 20-month low, while Hong Kong shares slumped to their lowest levels since July 2016, as surging commodity prices, escalating Russia-Ukraine crisis and fresh coronavirus cases kept investors on edge on Monday, reports Reuters.

China’s economic growth

China set a higher-than-expected economic growth target on Saturday, which analysts say is tough to reach and requires more supporting measures.

The blue-chip CSI300 index (.CSI300) fell 3.2% to 4,352.78, its lowest level since July 2, 2020. The Shanghai Composite Index (.SSEC) lost 2.2% to 3,372.86 points.

  • China targeted slower economic growth of around 5.5% this year as headwinds including an uncertain global recovery and a downturn in the country’s vast property sector cast a pall on the world’s second-largest economy. The target was, however, above economists and analysts’ estimates.
  • Around the globe, oil prices soared and shares sank as the risk of a U.S. and European ban on Russian products and delays in Iranian talks triggered what is shaping up as a major stagflationary shock for world markets.
  • Consumer staples (.CSICS), healthcare (.CSIHCSI), information technology (.CSIINT), new-energy (.CSI399808) and semiconductor stocks (.CSIH30184) went down between 3% and 4%.
  • Mainland China reported the highest number of daily new local symptomatic COVID-19 infections in about two years, as the highly transmissible Omicron variant pressures its stringent policy to curb each outbreak quickly.
  • Tourism (.CSI930633) and transport (.CSI000957) slumped 6.9% and 4.8%, respectively.
  • Real estate developers (.CSI000952) edged down 0.1%, and banks (.CSI000951) lost 2.3%. The government will support the commercial housing market to better meet homebuyers’ legitimate needs, and implement city-specific policies to promote healthy development of the property sector, Premier Li Keqiang said. 
  • “Beijing continues to encourage the ‘one city, one policy’, in order to facilitating a virtuous cycle and healthy development of the housing market,” HSBC analysts said in a note.
  • The start-up board ChiNext Price Index (.CNT) slumped 4.3%, with Contemporary Amperex Technology (300750.SZ) tumbling 7.5%.
  • Outflows through the Northbound leg of Stock Connect on Monday totalled 4.9 billion yuan ($0.78 billion), according to Refinitiv data. (.NQUOTA.SH), (.NQUOTA.ZK)
  • The Hang Seng index (.HSI) fell 3.9% to 21,057.63, while the China Enterprises Index (.HSCE) lost 3.6% to 7,412.59 points.
  • The Hang Seng Index has lost 10% YTD.
  • “While we continue to believe that Hong Kong offers deep allocation value at its recent levels, not everyone can stomach the potential market upheaval, should the Ukraine War intensify further,” Hao Hong, head of research at BOCOM International, said in a note.
  • The Hang Seng Tech Index (.HSTECH) plunged 4.4% to a record low, with Meituan (3690.HK) slumping more than 10%.
  • Financial stocks (.HSCIF) fell 4.4%, with HSBC Holdings and Standard Chartered down more than 7% each.
  • Consumer staples (.HSCICS) and healthcare shares (.HSCIH) retreated 4.5% and 5.7%, respectively.
  • The energy sector (.HSCIE) added 0.8%, with PetroChina up 4.4% on soaring oil prices.

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Source: Reuters