The U.S.-listed shares of China-based companies were rocked Monday, as China President Xi Jinping’s moves to consolidate power fueled fears that current policies that have led to a slowing economy will continue.
Chinese leader Xi was named over the weekend to a third, five-year term as general secretary, ignoring the custom of stepping down after two terms, as the Associated Press reported. Xi also dropped No. 2 leader Premier Li Keqiang, a proponent of market-style reform and private enterprise, from a seven-member Standing Committee in favor of stronger Xi allies.
That spooked investors already reeling from a slowing economy, amid fears over the current zero-COVID policy that has led to lockdowns, and uncertainty over whether the crackdown on technology companies will continue.
The iShares China Large-Cap exchange-traded fund
sank 8.8% in premarket trading, putting them on track to open at the lowest price seen during regular-session hours since November 2008.
That follows a 6.4% plunge in Hong Kong’s Hang Seng
to a 13-year low, while the Shanghai Composite
Also, while data showed that the Chinese economy grew more than expected in the third quarter, the pace of growth year to date remained well below the annual growth target. “The [growth] gap is due to China’s impossible COVID-zero mission, which has been confirmed and cemented with Xi’s third term in office,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Among the more-active China-based companies trading in the U.S., shares of electric vehicle maker Nio Inc.
tumbled 11.9% ahead of the open, to head for the first trade below the $10 level since July 2020.
Among other EV makers, shares of XPeng Inc.
dropped 12.4% toward a record low and Li Auto Inc.
lost 9.9% toward a two-year low.
Ecommerce giant Alibaba Group Holding Ltd.’s stock
dove 11.8% toward the lowest price seen since February 2016.
Elsewhere, shares of JD.com
slumped 15.7%, Pinduoduo Inc.
cratered 14.9%, iQiyi Inc.
lost 10.3%, Bilibili Inc.
plunged 16.8% and Baidu Inc.