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
FXI,
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
HSI,
to a 13-year low, while the Shanghai Composite
SHCOMP,
shed 2.0%.
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.
NIO,
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.
XPEV,
dropped 12.4% toward a record low and Li Auto Inc.
LI,
lost 9.9% toward a two-year low.
Ecommerce giant Alibaba Group Holding Ltd.’s stock
BABA,
dove 11.8% toward the lowest price seen since February 2016.
Elsewhere, shares of JD.com
JD,
slumped 15.7%, Pinduoduo Inc.
PDD,
cratered 14.9%, iQiyi Inc.
IQ,
lost 10.3%, Bilibili Inc.
BILI,
plunged 16.8% and Baidu Inc.
BIDU,
slid 12.0%.
