09 October 2024
The Chinese stock market is experiencing a sharp decline following a strong rally in recent weeks. On October 8, the Hang Seng Index (#HSI on FreshForex) plummeted by 9.56%, reaching 20,893 points.
The Hang Seng China Enterprises Index, which tracks Chinese stocks traded in Hong Kong, dropped even further — by 10.9%. The CSI 300 Index of mainland China, which started the day with an 11% gain, ended with a nearly 8% loss.
The main reason for the drop is growing investor dissatisfaction with the lack of new economic stimulus measures from the Chinese government. Expectations were high, especially after the National Development and Reform Commission's press conference, where economic support was promised but no concrete actions were provided. This has heightened uncertainty in the market.
What has been done previously:
Bottom line: The market is waiting for action. Given the history of sharp declines in the Chinese market, such as in 2015 when the CSI 300 Index lost 40% in two months, the Chinese government cannot afford a similar outcome and may direct efforts to strengthen investor confidence. Since mid-September, #HSI has experienced a steady bullish trend, and our analysts believe these trends could repeat.
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