Chinese stocks nearing 2023 fell as re-opening rally sputters

Chinese shares have pared their gains this year as concerns mount over the country’s economic performance and the possibility of a US debt default.

China’s CSI 300 index of Shanghai- and Shenzhen-stocks fell as much as 1 percent on Wednesday, pushing the annual loss to 2 percent by accounting for the weakening of the renminbi against the dollar. In Hong Kong, the Hang Seng China Enterprises index fell to 1.6 percent.

The recent slide in Chinese stocks following disappointing economic figures that signaled the country’s return to zero-Covid restrictions has begun to stall. Valid data for this month is displayed showing unemployment among Chinese youthone in five is unemployed.

“Many investors lack confidence in the Chinese market,” said Dickie Wong, head of research at Kingston Securities in Hong Kong. Wong said the Chinese government “can’t do anything about youth unemployment at the moment”.

“Young people don’t want to work in the countryside or factories, they want to work for Alibaba or Tencent,” he said, “but Chinese tech companies are cutting their workforce now.”

Alibaba shares fell 1.6 percent on Wednesday after the company announced it was cutting 7 percent of the workforce at its cloud business.

Elsewhere in the region, Japan’s Topix index – which this month hit its highest level since 1990 – fell 0.3%, and Australia’s S&P/ASX 200 fell 0.5%.

The collapse in Asia-Pacific economies came after a sell-off on Wall Street after policymakers in Washington failed to seal a deal to raise debt, less than two weeks before the US government shutdown.

A lack of visible progress in talks between US President Joe Biden and Republican House Speaker Kevin McCarthy sent the S&P 500 index down 1.1%, while the tech-focused Nasdaq Composite lost 1.3%.

In currencies, the New Zealand dollar fell 1.3 percent against the US dollar after the country’s central bank raised interest rates by 0.25 percent but looks set to hold off on further hikes.

“Based on the RBNZ’s forecast for the official rate, the Bank has already begun to tighten,” economists at Capital Economics wrote in a note following the bank’s decision to raise rates to 5.25 percent.

Futures suggested the FTSE 100 was down 0.4 percent at the open, while the S&P 500 was expected to rise 0.1 percent as trading opened on Wall Street in the afternoon.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *