Panic Selling Grips Chinese Stocks In Biggest Plunge Since 2008

Mar 14, 2022

Panic Selling Grips Chinese Stocks In Biggest Plunge Since 2008

Chinese equities traded in Hong Kong saw their weakest day since the global economic crisis in 2008, as panic selling was triggered by fears regarding Beijing's tight connection with Russia and rising regulatory threats.

On Monday, the Hang Seng China Enterprises Index fell 7.2%, the most since November 2008. The Hang Sang Technology Index fell 11%, the biggest drop since the index's inception in July 2020, wiping off $2.1 trillion in value from a year-ago high.

The large fall comes in response to a report by US sources that Russia has requested military aid from China for its campaign in Ukraine. Despite China's denial of the claim, investors fear that Beijing's possible outreach to Vladimir Putin might spark a worldwide reaction against Chinese enterprises, leading to possible sanctions. Confidence was also harmed by a COVID19-induced shutdown in Shenzhen, a critical technology center, and the northern province of Jilin.

This comes on the heels of a wave of regulatory concerns. Tencent Holdings Ltd. is allegedly facing potential unprecedented penalties for violating anti-money laundering regulations, prompting a roughly 10% drop in the company's shares on Monday. Additionally, there is a possibility that Chinese corporations may be delisted from the United States, as the Securities and Exchange Commission has identified many firms as part of an assault on foreign corporations that refuse to reveal their books to US authorities.

"If the United States chooses to put sanctions on China as a whole or on specific Chinese firms doing business with Russia, that would be concerning," warned Mark Mobius, who founded Mobius Capital Partners after spending more than three decades at Franklin Templeton Investments. "In this situation, the whole narrative is still up in the air."

Shareholders have cause to be nervous after the announcement of huge losses tied to Russia by many large-name firms. Since the conflict started, BlackRock Inc.'s assets exposed to Russia have fallen by $17 billion.

On Friday, the Golden Dragon Index, which monitors Chinese corporations' American depository receipts, fell 10% for the second straight day – something it has never experienced in its 22-year lifetime. It plunged up to 13% Monday, after the largest weekly fall since at least 2001. On Monday, China's benchmark CSI 300 Index fell 3.1%. Additionally, the onshore yuan sank to its lowest level in a month as investor confidence about Chinese assets deteriorated.

"In the near term, we don't see any massive catalysts that could support Chinese assets, although quarterly reports may cause some equity price movements," noted Marvin Chen, a Bloomberg Intelligence analyst. "For a meaningful improvement in China's technology sector, we may need to witness a change in regulatory approach, which the just finished NPC conference did not provide."

Even in the midst of the sell-off, mainland traders have kept buying Hong Kong equities, though their acquisitions are not enough to support share prices. Since Feb. 22, they have been net purchasing Hong Kong shares through the stock connect, amassing $1 billion on Monday, the biggest since January. China Bulls The unprecedented decline in technology shares is confusing China bulls, the number of whom has increased this year as analysts bet on a comeback in response to the People's Bank of China's policy softening.

Goldman Sachs Group Inc. analysts reduced their enthusiasm for China equities, lowering their MSCI China Index value forecasts.

"We maintain an overweight position in China due to its well-anchored growth expectations/targets, easing policy, depressed valuations/sentiment, and low investor positioning, but reduce our 12-month valuation target from 14.5 to 12 due to shifts in the global microeconomic climate and increased geopolitical tensions," analysts including Kinger Lau stated in a note on Monday.

The MSCI China Index's value has more than halved from its February 2021 high. The index is now trading at around 9 times 12-month forward profits projections, compared to a five-year average of 12.6.

"While the value is attractive, if you are desperate to close your positions, valuation doesn't matter," explained Yasutada Suzuki, Sumitomo Mitsui Bank's head of developing market investments.

Subscribe Our Newsletter

Goodbye Easy Money as Hawkish Central Banks Speed Up Rate Hikes
Goodbye Easy Money as Hawkish Central Banks Speed Up Rate Hikes

Two years after the pandemic sent the global economy into a deep but brief recession, central bankers are withdrawing emergency assistance – and they're doing it far more quickly than either they or most investors anticipated.

Banks and Finance
Mark Zuckerberg's Latest Move Has a High Impact on Meta Stock.

Milena

Mark Zuckerberg’s Latest Move Has a High Impact on Meta Stock. Here Is Why.

In early market trade, Meta stock was down roughly 3%. Here is why.

Stocks
B2BROKER Liquidity B2BROKER Liquidity
Sponsored
Constantine

Needs and Wants: Key Differences
Learn about needs and wants and the difference between the two.

discover
Starting a Forex Brokerage

Constantine

Why and How to Start a Forex Brokerage in 2024

Learn the ins and outs of starting your own forex brokerage firm in 2024 to make the most of the current trends in electronic trading.

Forex Business
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Сonstantine

    Best Crypto to Buy Now: Guide for Investors

    Best Crypto To Buy Now

    Hazem

    Grok vs ChatGPT: What’s the Best AI Assistant You Need in 2025

    Grok vs ChatGPT

    Сonstantine

    How to Choose the Right Liquidity Provider for Your Brokerage

    How to Choose the Right Liquidity Provider for Your Brokerage

    Сonstantine

    Low-Latency Trading Defined: Speed, Strategy and Technology

    Low-Latency Trading Explained

    Hazem

    How Liquidity Depth Affects Slippage in High-Volume Trading

    Liquidity depth and slippage in trading

    Hazem

    What is FIX API Liquidity Connection and How Does it Power Institutional Trading?

    FIX API in institutional trading

    Сonstantine

    OTC Trading Strategies and Technologies to Succeed in Over-the-Counter Markets

    OTC Trading Strategies

    Alexander

    What is OTC Trading? A Complete Guide for 2025

    what is OTC

    Alexander

    Synthetic Futures: A Trader’s Guide to Replicating Positions with Options

    How to Trade Synthetic Futures

    Сonstantine

    Order Book Depth: What It Is And Why It Matters?

    Order Book Depth What It is And Why It Matters

    Alexander

    Spot vs Perpetual Futures: Which Is Right for You?

    Spot vs Perpetual Futures explained

    Hazem

    5 Reasons Traders Are Switching to Perpetual Futures

    5 Reasons to Switch to Perpetual Futures

    Constantine

    Top 3 Liquidity Challenges Facing New Exchanges and How to Solve Them

    Top 3 Liquidity Challenges Facing New Exchanges Today

    Constantine

    Financial Planning in the Cryptocurrency Era — Master Crypto and Digital Asset Strategies

    Financial Planning in the Cryptocurrency Era

    Hazem

    Best Platforms to Trade Perpetual Futures in 2025

    Best platforms to trade perpetual futures in 2025

    Alex

    Top 10 Fintech Website Development Agencies for 2025

    Best Fintech Website Development Agencies for 2025

    Сonstantine

    Internal vs External Range Liquidity In ICT Trading Explained

    Internal vs External Range Liquidity In ICT Trading

    Constantine

    Portfolio Backtesting — Tools, Metrics, and Methods Explained

    Portfolio Backtesting

    Сonstantine

    ICT Trading Explained: Smart Money Concepts, Tools and Setups

    ICT Trading Explained

    Сonstantine

    CFD Trading Strategies: A Practical Guide to Risk and Execution

    CFD Trading Strategies

    Alexander

    What is a Fair Value Gap? A Guide to Trading Market Imbalances

    What is Fair Value Gap

    Vitaliy

    Triangle Patterns in Trading: Mastering Ascending, Descending & Symmetrical Strategies for Maximum Profit

    Triangle Patterns in Trading: Ascending, Descending & Symmetrical Guide

    Alexander

    What Is COTI? Payments, Token & Price Prediction

    What is a COTI coin

    Constantine

    Best Copy Trading Software in 2025

    Best Copy Trading Software in 2025
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.