Tech stocks in China are getting hammered again

Ulet Ifansasti/Getty Images
  • Stocks in China are on track for their fourth straight day of falls, despite bouncing off intra-day lows after the lunchbreak.
  • Selling has been focused on the tech-focused ChiNext index, which has now lost more than 7% since last Tuesday.
  • DailyFX strategist Ilya Spivak attributed the falls to trade war fears and the ongoing tightening in global liquidity.

Chinese stocks are under pressure again to start the week.

Today’s falls follow three straight selloffs into last Friday’s close, as the dual headwinds of trade war threats and domestic property market restrictions weighed on mainland stock exchanges.

A somewhat familiar pattern briefly played out in afternoon trade, with stocks making a bit of a comeback as traders returned from the lunch break.

But selling resumed into the close, and the tech-focused ChiNext index was hit particularly hard. It fell by as much as 3% before closing 2.4% lower.

Reuters

It marked the fourth straight decline of at least 1%, and the index has now lost around 7.4% since last Tuesday.

The ChiNext is a component of the Shenzhen Stock Exchange, one of the two stock exchanges in China along with the benchmark Shanghai Composite index. The Shenzhen and Shanghai exchanges were down by 1.9% and 1.3% respectively.

“The Shanghai and Shenzhen benchmarks have been down aggressively in recent days, which I put down to trade war tensions as far as timing goes,” DailyFX strategist Ilya Spivak told Business Insider.

“Rising global borrowing costs against a backdrop of Fed rate hikes and the issuing of more debt to finance the widening deficit set the stage,” he added.

“That puts pressure on tech supply chains at precisely the wrong time politically.”

ChiNext was established in 2009, and was set up by authorities as an investment platform to mirror that of the tech-focused NASDAQ in the US.

Here’s how the other major Chinese indexes finished up, along with stocks in Hong Kong and the daily movements in China’s currency:

  • Shanghai Composite 2,705.84 , -1.26%
  • SSE50 2,407.55 , -0.25%
  • Shenzhen Composite 1,456.90 , -1.96%
  • CSI300 3,273.69 , -1.25%
  • CSI500 4,825.35 , -2.12%
  • Hang Seng 28,074.53 , 0.35%
  • USD/CNY 6.5973 , 0.20%
  • USD/CNH 6.8575 , 0.15%

Earlier today, the People’s Bank of China fixed the Chinese yuan at 6.8513 against the US dollar — the lowest level since May last year.

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