(Bloomberg) — U.S.-listed Chinese stocks slid again on Monday, after posting three weeks of losses, as expanded Covid lockdown measures in major cities sparked concerns over the country’s economic growth outlook.
The Nasdaq Golden Dragon Index fell as much as 4.1%, adding to the guage’s 10% drop last week. Alibaba Group Holding Ltd. led a decline in American depositary receipts, dropping as much as 5.4%. Electric carmakers including Nio Inc. and Li Auto Inc. also declined. The weakness tracks a 4.9% slump in China’s CSI 300 Index, which closed at its lowest level in two years.
READ: China Lockdown Angst Rips Through Markets as Stocks, Yuan Plunge
Rising Covid cases in Beijing have stoked fears of a citywide lockdown, with China’s capital already putting some residential compounds under restrictive measures. The city also announced mass testing plans, following the footsteps of financial hub Shanghai, which has been under a standstill for almost a month.
“The fact that another major metropolitan city may be heading in a similar direction is obviously bad news,” said Adam Montanaro, investment director at Aberdeen Asset Management. “Every part of the economy is getting increasingly stretched and impacted by these lockdowns.”
The group has pared some losses from premarket trading, after the Chinese central bank cut financial institutions’ foreign exchange reserve ratio by one percentage point to 8%. The decision will take effect on May 15.
“Until China eases back at least somewhat from its zero-tolerance approach to COVID, sentiment will stay negative toward the country,” Vital knowledge founder Adam Crisafulli wrote in a note this morning.
Concerns about the economic costs of prolonged Covid restrictions, together with lingering delisting threats and muted economic support, have put U.S.-listed Chinese shares under pressure in recent sessions. The Nasdaq Golden Dragon China Index has dropped 17% since Beijing vowed to stabilize financial markets on March 16.
“More than a month after China policy makers announced easing measures were incoming, investors have been left underwhelmed as lending rates were left unchanged in April,” Bloomberg Intelligence equity strategist Marvin Chen wrote in a note. The window of opportunity for more aggressive easing is getting smaller as the yuan continues to weaken, Chen said.
Elsewhere, China has asked 18 major online platforms, including some from Weibo Corp., Baidu Inc. and Zhihu Inc. to improve their systems to deal with violence on the internet.
(Updates shares at open and commentary in the sixth paragraph)
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