Chinese shares saw big swings early on Monday, as a ramp-up of Covid restrictions and poor economic data worsened the outlook for the market, while some dip-buyers emerged.
(Bloomberg) — Chinese shares saw big swings early on Monday, as a ramp-up of Covid restrictions and poor economic data worsened the outlook for the market, while some dip-buyers emerged.
The Hang Seng China Enterprises Index slumped as much as 2.2% early Monday, before erasing all the losses. Tech shares surged following automaker BYD Co.’s record earnings while property stocks plunged. The CSI 300 Index, a benchmark of onshore shares, fell as much as 1.3% before paring a bulk of the decline.
Chinese stocks have faced relentless selling pressure through most of the year, hammered by Covid curbs and tensions with the US. Sentiment suffered a fresh blow after President Xi Jinping’s power grab and his recommitment to the Covid Zero strategy at the Community Party congress, which spurred the worst ever five-day rout for the Hang Seng China gauge following any leadership meet since its 1994 inception.
Down nearly 40% this year, the Hang Seng China Enterprises Index is the worst performer among more than 90 global equity measures tracked by Bloomberg. The gauge stared at its lowest close since 2005 at one point early on Monday before trading up 0.7% as of 10:43 a.m. in Hong Kong.
“Investors appear to be increasingly concerned about three issues in particular,” namely that China’s reopening might take longer than expected, China’s social priorities may take precedence over the economy and Beijing’s emphasis on security means a higher risk premium, Nomura Holdings Inc. strategists including Chetan Seth wrote in a note.
China’s factory and services activity contracted in October, data showed on Monday. That signaled Covid curbs and an ongoing slump in the property market are continuing to pressure the world’s second-largest economy. The official manufacturing purchasing managers index fell to 49.2, below an estimate of 49.8 in a Bloomberg survey.
Read: China Factory, Services Activity Slump as Covid Hits Recovery
Policymakers last week imposed fresh lockdowns from Wuhan to the nation’s industrial belt on the east coast, following a pickup in cases. Meantime, Macau mandated residents to undergo three days of rapid Covid tests and locked down a casino resort over the weekend.
The biggest drag on the HSCEI was Longfor Group Holdings Ltd. which plummeted most on record following the resignation of its chairman.
Read: Longfor Billionaire Wu Quits as Chair, Shocking Investors (1)
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