China’s Nasdaq-Style Index Falls to Record Low on Growth Concern - Yahoo Finance

singkrata.blogspot.com

(Bloomberg) -- China’s gauge of tech equities fell to the lowest since its inception more than three years ago, worn down by concerns over higher US rates’ impact on global liquidity and a weak export outlook.

Most Read from Bloomberg

The Star 50 Index, which tracks manufacturers, chipmakers and the biggest companies on the Star Board, closed down 2.5% Monday. The gauge is set for a sixth month of declines.

AI chip developer Cambricon Technologies Corp. plunged by the 20% daily limit, leading the decliners on the gauge. Semiconductor Manufacturing International Corp., one of the largest companies in the index, fell 0.5%, while another chipmaker, ASR Microelectronics Co., was down 7.3%.

Chinese markets are seeing waves of selling as the country struggles with economic growth, and exports falter with high global interest rates affecting demand. The Hang Seng Tech Index, which tracks Chinese tech companies listed in Hong Kong, has dropped 11.3% this year.

“The biggest factor that is dragging on tech is liquidity conditions,” said Li Xuetong, a fund manager at Shenzhen Enjoy Equity Investment Fund Management Co. “And amid the Fed’s reluctance to lower rates, the electric vehicle and pharma stocks have a hard time funding and keeping current valuations.”

Meanwhile, the outlook for renewables exports — which impacts companies on Star 50 such as Trina Solar Co., Jinko Solar Co., and GoodWe Technologies Co. — has become less rosy. The European Union’s recent investigation into Chinese subsidies for electric vehicles “could hit almost $7 billion” in car and van shipments, Clelia Imperiali, an ESG trade analyst at Bloomberg Intelligence, said.

Huawei Technologies Co.’s recent releases of its M7 electric vehicles and the Mate 60 Pro smartphone have lifted traders’ demand for stocks related to the Chinese tech giant. But the Huawei boost has done little to move the index higher.

The Shanghai Composite Index dropping below the key level of 3,000 also set in motion forced-selling and client redemption that may be intensifying, Li noted.

With a close of 2,939.29 Monday, the gauge is also on the brink of breaking through a critical 18-year trend-line that has offered support during the US-China trade war and in the darkest moments of the pandemic. That trend line this time around is seen at around 2,900 points.

The CSI 300 Index, a benchmark of onshore Chinese equities, dropped on Monday to its lowest level since February 2019 after last week erasing all the gains seen since China’s reopening from Covid restrictions.

The Star Board’s launch in Shanghai was a high-profile project announced in person by President Xi Jinping five years ago during the US-China trade war. It was intended to foster companies with core homegrown technology to counter US export restrictions.

The board was touted in its earlier phase as an experimental project to provide funding to early-stage firms. It was also a trial ground for a relaxed initial public offering process, known as the registration-based reform, that has now been expanded to the entire onshore market.

Beijing Kingsoft Office Software Inc., which offers virus protection and cloud computing, and Advanced Micro-Fabrication Equipment Inc. are other large companies in the index.

(Updates prices throughout)