China indexes Drop 2% Following Global Tech Stock Rout

Li Chen
25 Jul, 2024
Hong Kong

China stock indexes joined the world market sell-off after benchmark indexes on Wall Street dropped sharply in overnight trading. 

The Hang Seng index dropped nearly 2%, and the CSI index decreased 1% after tech stocks fell more than 3% following losses in New York. 

The S&P 500 index and the Nasdaq Composite dropped 2.3% and 3.7% at close on Wednesday after Tesla and Google-parent Alphabet reported weaker-than-expected quarterly results. 

Benchmark indexes in Japan declined by 3.3%, and they in South Korea fell by 1.8%. 

Market sentiment was negative amid a protracted property market crisis, a lack of coherent policy measures from Chinese leadership, and weakening consumer confidence. 

Investors' expectations are low ahead of the Politburo meeting, a meeting of Chinese top leaders to discuss policy alternatives and finalize new measures to revive long-term economic growth. 

China is undergoing a secular decline in economic growth from above 9% to less than 3% as the economy faces demographic challenges, globalization of Chinese businesses, steady capital outflow, and a lack of financial headroom amid huge government debt. 

The People's Bank of China unexpectedly cut its one-year loan prime rate by 20 basis points to 2.3% from 2.5%, the first rate cut for this loan facility in a year and the largest since April 2020. 

On Monday, the central bank trimmed its short-term lending rates by 10 basis points as policymakers offered supportive measures to increase lending to the industrial economy. 

 

China Stock Movers 

The Hang Seng index declined 1.9% to 16,984.85, and the CSI 300 index dropped 0.7% to 3,393.96. 

Tech stocks led the decline in Hong Kong and Shanghai following the market selloff in New York. 

Alibaba Group fell 0.7% to HK $73.65, Baidu dropped 2.8% to HK $85.30, and Tencent Holdings decreased 3% to HK $352.0. 

Electric vehicle makers were under pressure for the second day in a row after Tesla reported a decline in revenue in its automotive unit for the second quarter in a row. 

BYD decreased 1% to HK $231.0, Li Auto fell 1.7% to HK $73.20, and Xpeng declined 1.9% to HK $31.65. 

Chow Tai Fook Jewellery declined 1.4% to HK $7.28, and the specialty retailer extended losses for the second day in a row after the company reported a 20% decline in sales in the second quarter on Wednesday.