The China markets tumbled Monday morning after President Xi Jinping consolidated his grip on power even further by stacking the party’s most powerful decision-making body with his key allies and getting a third term in office
Hong Kong’s Hang Seng Index plunged 6% to 15,220 points in afternoon trading, the second-lowest level since the 2008 global financial crisis. Chinese tech giants Tencent and Meituan had tumbled as much as 10.2% and 13.8%, respectively. The billionaire moguls behind the companies—Tencent’s Ma Huateng and Meituan’s Wang Xing—each lost more than $1 billion of their wealth within the span of a couple hours, making them among the worst performers on the World’s Real-Time Billionaire list on Monday.
On Sunday, Xi revealed the lineup of the Politburo Standing Committee, China’s top governing body. The other six men on the committee are all seen as loyalists with close ties to Xi.
Analysts say investors are growing increasingly anxious over the new leadership’s continued regulatory pressure on private enterprises, as well as the country’s strict Covid-Zero policy which has shown no signs of letting up. In Xi’s opening speech delivered during the week-long congress, he praised China’s Covid prevention measures as a “people’s war” to fight the coronavirus and protect lives.
Those measures, coupled with an ongoing emphasis on areas such as security, regulating the housing market and promoting common prosperity, has disappointed investors who had been looking for signs of regulatory easing.
“The concern is that President Xi now has unfettered power to pass policies that are not friendly to the market,” says Justin Tang, Singapore-based head of Asian research at advisory group United First Partners.
China released stronger-than-expected GDP and other economic data on Monday, just a day after Xi Jinping clinched a historic third term in power following the conclusion of a major political gathering.
But foreign investors were still spooked and dumped Chinese equities in overseas markets, concerned that Xi’s tightening grip on power will lead to an escalation in Beijing’s existing policies and further dent the economy.
China’s GDP grew 3.9% in the third quarter from a year ago, beating market expectations, the National Bureau of Statistics announced on Monday. Previously, a Reuters poll of economists had expected growth of 3.4%.
That marked a pick-up from the 0.4% increase in the second quarter, when China’s economy was battered by widespread Covid lockdowns. Shanghai, the nation’s financial center and a key global trade hub, was shut down for two months in April and May.
But the newly released 3.9% growth rate was still below the annual official target that the government set earlier this year.
“The outlook remains gloomy,” said Julian Evans-Pritchard, senior China economist for Capital Economics, in a research report on Monday.
The outlook remains gloomy,” said Julian Evans-Pritchard, senior China economist for Capital Economics, in a research report on Monday.
“There is no prospect of China lifting its zero-Covid policy in the near future, and we don’t expect any meaningful relaxation before 2024,” he added.
●Stocks, yuan extend losses Monday as Party congress ends
●Traders worry leadership filled with Xi allies may disappoint