[ad_1]
In a stock market selloff that has rippled around the world, and China are the biggest losers and remain vulnerable to more bread.
China's stock markets were among the hardest hit Thursday after steep declines in the U.S. the day before. The technology-heavy Shenzhen market slid 6.5%, while the Shanghai Composite fell 5.2% -both marked their worst declines since February 2016.
Within China, tech companies have been the biggest victims, finding themselves in the global market, and they are falling in the face of China's biggest tech suppliers.
"Everything is going down," said Caroline Yu Maurer, Hong Kong-based head of Greater China equities at BNP Paribas Asset Management. "In China, the domestic economy is the primary concern. On top of that you get the trade war issues. And now tech stocks in the U.S. are selling off. "
While tech losers in the U.S.
Amazon.com
Inc.
AMZN -1.25%
and Netflix Inc. are falling from record highs, the Chinese market is going from bad to worse. It was already one of the worst-performing markets in the world this year. Shenzhen's main index has now fallen 32% for the year.
Other tech-dominated markets in Asia also fell sharply Thursday. Taiwan's Taiex fell 6.3%, its worst slide since January 2008. South Korea's Kospi index dropped 4.4% and Japan's Nikkei 225 index skidded 3.9%.
While rising in the U.S., China's tech sector was already in a fragile position.
Washington has recently charged Beijing of tech-related spying and raised concerns about human-rights violations. Potential U.S. sanctions against Chinese tech companies could result in the disappearance of a major market for their products.
Hong Kong-listed shares of
ZTE
Corp.
US, for the year, fell 6.7% on Thursday and have lost nearly one-fourth of their market value in October. Hong Kong-listed Lenovo Group Ltd., a Chinese maker of PCs and servers, has fallen 18% this month.
"The prospect of suffering in the crucial market is one of the future financial performance," said Shen Meng, director at Chanson & Co., a boutique investment bank in Beijing.
Nearly a third of the 3,551 companies listed in Shanghai and Shenzhen had their share of the Thursday.
Tencent Holdings
Ltd.
, the most valuable company listed in Asia, has lost more than a third of its market value this year and is down $ 250 billion from its record high in January, according to FactSet. That drop alone is bigger than the market values of all but 15 of the companies in the S & P 500.
The selloff for Tencent with 6.8% Thursday-a record 10th straight down session. The Chinese tech giant's own popular social-messaging app WeChat and is one of the world's largest videogame publishers by revenue.
The tough times for Chinese stocks have hurt many of the funds that track their performance. China-focused hedge funds are down 9.5% on average this year through September, according to provider eVestment. That compares with an average gain of 35% for these funds in full-year 2017.
The iShares China Large-Cap exchange-traded fund, one of the largest Western ETFs tracking equities in the country with just under $ 5 billion in assets, fell by around 6.4% on Wednesday and Thursday.
The tech-led decline has Mattias Lamotte, chief executive at Vallotte Holdings, a proprietary trading firm in Hong Kong, running for cover. "That might be a signal in the next 12 months," he said.
Mr. Lamotte said the market is one of the fastest growing markets in the world. In 2016 the S & P 500 fell by more than 10% from the beginning of the year through mid-February.
Also weighing on Chinese markets: its weakening currency. China loosened lending conditions this week even as the Federal Reserve has signaled its rate increases would continue apace. That has the price of the year to the dollar. In offshore markets, the Chinese currency was slightly down on the day at 6.9416 to the dollar.
The yuan has not passed 7 to the dollar in more than a decade. In 2015 and 2016 when the currency weakened sharply, the depreciation sparked capital outflows from China, an outcome that Beijing is eager to avoid this time around.
To be sure, investors have been here before. U.S. tech stocks, particularly amidst fears of increased regulatory oversight. That selloff proved short-lived.
Olivier d'Assier, Head of Applied Research for the Asia-Pacific region at Axioma, said he would not hesitate to comment on the latest market declines.
"What we saw today was an orderly risk-off, flight-to-safety move, not to get dirty, get out of Dodge and head for the door collecting cash as you go," he said.
Write to Steven Russolillo at [email protected], Shen Hong at [email protected] and Mike Bird at [email protected]
Source link
