Relentless Selling in China Stocks Evokes Memories of 2008 Crash

(Bloomberg) — A selloff across Chinese equities deepened on Tuesday as concerns about the country’s ties with Russia and persistent regulatory pressure sent shares on a downward spiral.

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The Hang Seng China Enterprises Index, which tracks Chinese shares listed in Hong Kong, sank 6.6%, following a plunge in the previous session that was the biggest since the global financial crisis. Tech giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd. led the decline. The benchmark Hang Seng Index slumped 5.7%, its biggest fall since July 2015.

China’s equities are looking increasingly risky on concerns that Beijing’s ties with Russia could spark new U.S. sanctions. That’s adding to worries from regulatory developments including a possible delisting from the U.S. exchanges. While upbeat economic data was a rare bright spot in the market, growing lockdowns in major Chinese cities are dimming the outlook.

“The selloff is overdone, but so is everything else,” said Andy Maynard, head of equities at China Renaissance Securities. “The market is crazy — there’s no fundamentals anymore. This might be worse than the 2008 financial crisis.”

The Hang Seng Tech Index saw an intraday swing of 10 percentage points on Tuesday, the wildest ever since the gauge was launched in 2020, Bloomberg-compiled data show. The China tech gauge lost 8.1%, extending declines from a February 2021 peak to nearly 70%.

“When faith is gone, people are ready to see a dark shadow in everything, some are even suspicious of the solid economic figures today,” said Yu Yingbo, an investment director at Shenzhen Qianhai United Fortune Fund Management Co Ltd. “It’s just a planned, persistent and synchronized selling.”

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Tech Rout

The selloff in Chinese equities has been especially severe in the tech sector. Already battered by Beijing’s yearlong regulatory crackdown and a looming Federal Reserve rate hike, sentiment toward Chinese tech had morphed into fear in recent days as investors turned their attention to the risk of sanctions should China…


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