Oct 24 (Reuters) – US-listed shares of Chinese companies slumped on Monday after President Xi Jinping’s new leadership team raised investor concerns that ideology-driven policies were being prioritized at the expense of private sector growth.
E-commerce giants Alibaba, JD.com, and internet giant Baidu all fell between 14% and 17%, despite the benchmark S&P 500 (.SPX) trending slightly higher.
The iShares MSCI China ETF (MCHI.O) slipped 10%, posting its steepest one-day decline on record.
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“The concern is that the Chinese government under Xi will continue to transition to a more socialist economic model, potentially forcing Chinese companies to increasingly focus on social goals rather than profitability,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon .
“By consolidating power, Xi is unlikely to resist this form of nationalization of corporate interests.”
Earlier in the day, Hong Kong stocks tumbled 6.4% to 13-year lows and China’s blue-chip stocks (.CSI300) fell 2.9% as investor concerns about the future of the world’s second-largest economy shook upbeat growth data for the third quarter overshadowed.
Xi on Sunday secured a landmark third term in the leadership, unveiling the new Politburo Standing Committee, staffed by Loyalists.
“While there have been no fresh announcements on the political front, the departure of perceived pro-stimulus officials and reformers … and their replacement by Xi’s allies suggests that ‘shared prosperity’ will be the officials’ primary push.” the strategists at TD said securities.
Music streaming provider Tencent Music, e-commerce platform Pinduoduo (PDD.O) and mobile game publisher Bilibili fell between 16% and 33%.
Electric vehicle makers Nio Inc, Xpeng and Li Auto fell between 23% and 30%.
EV makers were also weighed down by Tesla (TSLA.O) lowering entry prices for its Model 3 and Model Y cars in China for the first time this year, indicating signs of slowing demand in the world’s largest auto market. Continue reading
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Reporting from Medha Singh in Bengaluru, additional reporting from Bansari Mayur Kamdar; Edited by Maju Samuel and Sriraj Kalluvila
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