For its part, the yuan fell as much as 0.7% to 7.2782 per dollar to approach a record low seen last week. Meanwhile, the Hang Seng Index fell 6.4% on Monday, marking the biggest one-day drop since the global financial crisis in 2008.
“This indicator closed at its lowest level since April 29, 2009 and stocks in mainland China were also down, though not as much. The benchmark CSI 300 index was 2.9% lower and the Shanghai Composite Index was down around of 2%”, assured WSJ.
Investor concern
Chinese markets weakened after congress of the Communist Party concluded with a reorganization of the economic policy teamas investors expressed disappointment in Xi Jimping’s allied new leadership.
Among the biggest fears of investors is Xi Jinping’s speech of “common prosperity” and the role that state-owned companies would play, which would begin to play a more prominent role.
Investors were disappointed at last week’s congress when Xi defended his policy and stopped short of offering stimulus to prop up the housing market. The onshore yuan fell to the weakest level in 14 years and the CSI 300 tumbled in all but one session last week.
Another of the indices that showed the market’s discontent was the outflow of more than 17.9 billion yuan ($2.5 billion) by foreign investors from the domestic stock market, through the Stock Connect channel.
While markets may see some initial support this week on renewed political hopes, the general sentiment will remain cautious as investors await third-quarter growth data, which was abruptly delayed last week.
According to a report from Goldman Sachs quoted by the Hong Kong newspaper South China Morning Post, investors’ concern could be due to the “absence of recognized market-oriented economic reformers” among the seven members of the new Politburo Standing Committee, the all-powerful ruling body of the CCP.
Source: Ambito
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