After the resumption of trading following the extended National Day holiday, mainland China’s A-shares opened higher but saw their gains narrow. The National Development and Reform Commission’s press conference did not bring any surprises, while the Hong Kong stock market plunged by over 2,000 points. The Hang Seng Index opened lower by 250 points this morning, hit a low of 23,336 points, and closed at 20,926 points, plummeting by 2,172 points (9.4%), breaking the record for the largest single-day point drop set on January 22, 2008, by 2,061 points. The turnover also hit a new high of 620.4 billion with the return of northbound trading flows.
Meanwhile, the CSI 300 Index fell by 10.2%, and the ChiNext Index plummeted by 12.8%.
Tencent (00700) dropped by 8.3%, Alibaba (09988) fell by 9.1%, Meituan (03690) plunged by 15.3%, JD.com (09618) fell by 12.4%, HKEX (00388) dropped by 13.4%, and HSBC Holdings (00005) declined by 2.9%. The best and worst performing blue-chip stocks were CLP Holdings (00002) down by 0.1% and Longfor Group (00960) plummeting by 23.2%.
Morgan Stanley warned investors that the recent sharp rise in China’s A-shares has brought about overheating risks and pointed out that the stimulus policies recently announced by the Chinese government may not achieve the scale needed for the economy.
According to Chinese media citing financial institution sources, the financial regulatory authorities have issued window guidance to commercial banks, emphasizing the importance of investor suitability management and investor protection, and strictly prohibiting banks from using loan funds for unauthorized stock purchases.
HSBC noted that if we refer to the policy-backed market rally in April and May of this year for value assessment, in the property sector, only three stocks are trading at par or lower compared to the peak in May, namely China Overseas Land & Investment (00688) down by 15.8%, China Resources Land (01109) down by 13.2%, and Country Garden Services Holdings (01908) down by 11.7%, while the rest have significantly surpassed the previous levels.
WuXi AppTec (02359) plans to issue $500 million in convertible bonds.
The World Bank released its “East Asia and Pacific Economic Update” predicting that the recent implementation of a series of stimulus measures in China will lead to a temporary rebound in economic growth. The forecast for economic growth this year is 4.8%, which is expected to further slow to 4.3% next year, bringing additional pressure to the East Asia region.
As of the time of this report, Brent Crude oil has fallen by 2.2% to $80.2 per barrel. The “Big Three Oil” companies followed the market decline with PetroChina (00857) falling by 7.6%, CNOOC (00883) by 7.7%, and Sinopec (00386) by 8.8%.