The Nasdaq Golden Dragon China Index fell to lowest level since 2013 - by Vicky Ge Huang and Michelle Chan - 24.10.22.
U.S.-listed Chinese stocks plunged to their lowest level in nearly a decade, losing tens of billions of dollars in market value on Monday, one day after President Xi Jinping secured a third term as leader of the Communist Party.
The Nasdaq Golden Dragon China Index, which tracks dozens of Chinese companies listed on American exchanges, fell more than 14% to its lowest close since April 2013, erasing $73.4 billion in market cap since Friday’s close through Monday, according to Dow Jones Market Data.
The selloff followed a rout in Chinese stocks in Hong Kong and mainland China overnight with the Hang Seng Index recording its biggest one-day decline since the global financial crisis.
Stocks in the U.S., by contrast, continued to rally on encouraging corporate earnings results and the hope the pace of Federal Reserve rate increases will soon moderate. The Dow Jones Industrial Average rose more than 400 points, or 1.3%, to its highest level in six weeks. The S&P 500 gained 1.2%, while the tech-heavy Nasdaq added 0.9%.
The frantic selling came after Mr. Xi consolidated his control over the ruling Communist Party, stacking the leadership ranks with loyalists and clinching a convention-defying third term.
Foreign investors dashed for the exit. The American depository receipts of the five largest Chinese stocks lost more than $52 billion in combined market value.
Chinese internet and technology stocks were hit especially hard. Alibaba’s ADRs traded below $68, the price at which the e-commerce giant went public in its blockbuster 2014 initial public offering. Baidu, JD.com and Pinduoduo also suffered double-digit percentage losses.
“The risk premium of China increased tremendously among the minds of global investors,” said Vivian Lin Thurston, a portfolio manager at William Blair Investment Management. She said the selloff on Monday reflects investors’ skepticism over China’s future economic policies under the rule of Mr. Xi and his party loyalist allies, whom some analysts deem less pro-business.
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—Angel Au-Yeung, Juliet Chung, Hannah Miao, Alexander Osipovich and Eric Wallerstein contributed to this article.
Write to Vicky Ge Huang at vicky.huang@wsj.com and Michelle Chan at michelle.chan@wsj.com
Footage shows former Chinese leader Hu Jintao being accompanied offstage at the Communist Party congress, where he was sitting next to President Xi Jinping. Beijing didn’t answer questions about what happened. Photo: Mark R Cristino/Shutterstock
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