After weeks of soaring performance that positioned Chinese stocks among the best global performers year-to-date, a sharp selloff swept across Chinese markets overnight, with the Hang Seng Index in Hong Kong plummeting more than 9% on Tuesday.
The massive drop marks the index’s worst single-day loss since October 2008, during the height of the global financial crisis.
In mainland China, the Shanghai Composite Index also faced intense volatility but managed to close 4.6% higher after fluctuating wildly throughout the day, following a holiday week.
Investors, previously riding the rally, rushed to lock in profits, dampened by disappointment over the lack of aggressive fiscal stimulus announcements from Chinese officials.
Lack of Bold Stimulus Disappoints Investors
The sharp downturn was driven by growing disillusionment with Beijing’s latest policy measures, or rather, the absence of any major new stimulus.
Hopes had been high that the National Development and Reform Commission (NDRC) would unveil bold fiscal support to bolster the economy, but no such plans materialized.
Zheng Shanjie, chairman of the NDRC, addressed the nation in a media briefing, reiterating that China is on track to achieve its 5% GDP growth target for the year.
However, while acknowledging the economy's challenges in the face of a “more complex and extreme” global environment, the only concrete measures announced were a front-loaded 100 billion yuan ($14.1 billion) budget from 2025 and another 100 ...
