China Stocks in Worst Ever Post-Congress Rout as Gloom Persists

(Bloomberg) — Chinese stocks traded in Hong Kong headed for their worst showing ever following a Communist Party Congress after this year’s leadership gathering dashed hopes for more market-friendly policies.

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The Hang Seng China Enterprises Index slumped 4.3% as of 2:31 p.m. in Hong Kong. That took its losses for the week to over 9%, the most for any five-day period following a party meeting since the gauge’s inception in 1994. The index tumbled to the lowest since the 2008 global financial crisis in Monday’s historic rout and is on track for a fourth month of declines.

Traders are struggling to determine how long the rout will persist after a lack of supportive policies for the beaten-down property sector and the recommitment to the Covid Zero strategy at the congress left markets dismayed. To make things worse, fresh lockdowns are being imposed from Wuhan, coronavirus’s original epicenter, to China’s industrial belt on the east coast.

While sentiment seemed to somewhat stabilize in the last three days, the resumption of losses Friday has dented hopes for a sustainable rebound.

“The market is still in a downward trend” given the disappointment from the party congress, weak consumption, lackluster industrial profits and sporadic Covid outbreaks across the country, said Yan Kaiwen, an analyst with China Fortune Securities Co. Friday’s selloff is “mainly because of weak sentiment.”

The expiry of monthly futures and options contracts for the Hang Seng China gauge as well as a raft of earnings announcements boosted market volatility on Friday. Automaker BYD Co. and Industrial & Commercial Bank of China Ltd. — the world’s largest bank by assets — are among those due to report results.

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At the twice-a-decade meeting last week, President Xi Jinping stacked the leadership ranks with allies, limiting the scope for opposition to his strategies. Confidence is running low particularly among international investors, who pulled a record $2.5 billion from mainland stocks on Monday alone.

The Hang Seng Tech Index lost as…


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