Chinese stocks crumble -- and it wasn't just because of tariffs

Natalie Behring-Chisholm/Getty ImagesHe’s long Chinese real estate developers.
  • Chinese stocks were hosed again on Thursday.
  • The benchmark Shanghai Composite Index fell 2.5%, extending its losses over the past two sessions to just under 4%. It had been down as much as 3.5% earlier in the session.
  • Trade frictions with the United States, as well as the potential for further property restrictions, were cited as catalysts contributing to the move.

The threat of higher US tariffs on Chinese imports, as well as the potential for further property market restrictions, did not sitting well with Chinese investors on Thursday.

As seen in the scoreboard below, stocks were absolutely hosed, be they large-cap or small. The losses were even larger earlier in the session before recovering into the close.

Shanghai Composite 2,767.23 , -2.03%
SSE50 2,438.35 , -2.08%
Shenzhen Composite 1,511.27 , -2.45%
CSI300 3,369.69 , -2.25%
CSI500 4,995.82 , -2.15%
Hang Seng 28,218.28 , -1.96%
USD/CNY 6.5973 , 0.02%
USD/CNH 6.8372 , 0.22%

All major indexes on the mainland and in Hong Kong finished down 2% or more, adding to the steep losses seen on Wednesday.

The benchmark Shanghai Composite Index fell 2%, extending its drop from Tuesday’s closing level to close to 4%%.

No sector was spared the selling carnage with losses ranging from 0.7% for healthcare to 2.9% for tech.

Along with the prospect of the United States slapping even larger tariff rates on Chinese imports, the latest selloff coincided with reports that Chinese regulators are about to introduce even tougher restrictions on property purchases.

On Tuesday evening, China’s Politburo, the top decision-making body of the ruling Communist Party, said that it will “resolutely curb” house price rises, possibly in response to recent price gains in smaller centres.

Speculation over even tighter restrictions saw shares in Chinese property developers get walloped with the CSI300 real estate index tumbling 3.4%.

It fell as much as 5% earlier in the session, leaving it at the lowest level since August 2016.

The index has already lost 40% since January, leaving it not only in a bear market, but an ugly one at that.

Thomson ReutersCSI300 Real Estate Index Weekly Chart

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