China Stocks Plunge In U.S. On Concerns Policy Will Turn Left After Communist Congress

Shares in Chinese companies traded in the U.S. plunged in trade this morning on concerns about a left turn in policy in the country after a Communist Party congress re-elected Xi Jinping as leader along with six new Politburo members seen as Xi loyalists.

Internet e-commerce leaders such as Alibaba plunged 15% to $61.15, Pinduoduo lost 23% to $45.41, and JD.com dropped 15% to $35.66 shortly after noon, wiping out billions of dollars of market capitalization and personal fortunes.

Entertainment stocks were also fell amid worries about the growth outlook for the world’s second-largest economy. Tencent Music shed 8% to $3.52; last year, it traded at $26. iQiyi, the online video and content provider, also lost 8% to $1.86. Its U.S. traded shares were worth more than $25 in February last year. EV maker NIO lost 17% to $9.28; the Shanghai-headquartered manufacturer’s shares have lost 77% of their value in the past year.

China’s once high-flying economy has struggled with slowing growth this year in connection with Covid-19 lockdowns and travel restrictions that have hurt consumer spending and disrupted global supply chains. Third-quarter GDP rose 3.9% from a year ago — compared with an official 2022 target of 5.5%, the government said yesterday, but even that increase wasn’t enough to offset worries about the country’s new leadership. Hong Kong’s benchmark Hang Seng Index plunged 6% to a 13-year low overnight.

Xi won a third five-year term, consolidating political clout in unrivaled in decades in the country; the six members selected for the party’s powerful Politburo are Xi allies Li Qiang, Wang Huning, Cai Qi, Zhang Leji, Ding Xuexiang, and Li Xi. (See earlier post here.) Former Communist Party Secretary Hu Jintao was unexpectedly led away from the meeting from his seat next to Xi. Incumbent, reform-minded Premier Li Keqiang wasn’t named to the new Politburo at a time when private sector business leaders are concerned about new income redistribution measures and a government tilt in favor of state-owned enterprises.

Speaking to the press at a noontime gathering in Beijing yesterday, Xi, 69, fused praise for Marxism with nationalistic themes and reassurance that China’s economy will advance anew. The “strong fundamentals will not change,” said Xi, who didn’t take any questions from reporters.

The party meeting came also amid geopolitical tension with the U.S. over Taiwan and Beijing’s close ties with Russia. Underscoring the swirling political currents, the pro-business Wall Street Journal in an editorial over the weekend excoriated Morgan Stanley CEO James Gorman, Goldman Sachs President David Solomon, JPMorgan President Rob Kapito and other “masters of Wall Street” for attending an upcoming conference in Hong Kong with its “strongman” John Lee in connection with his handling of dissent there.

See related posts:

Elon Musk Backs China Special Zone For Taiwan That’d Be “More Lenient Than Hong Kong”

China Policy “Straitjacket” May End After Party Congress, Economist Says

Former China President Unexpectedly Led Out Of Party Congress — CNN

@rflannerychina