(Bloomberg) -- Chinese equities fell again on Tuesday following a dramatic selloff, as traders remained unsettled by the prospect of market-unfriendly policies under President Xi Jinping’s third term.
The Hang Seng China Enterprises Index, a gauge of Chinese stocks listed in Hong Kong, fell 0.7% as of 10:09 a.m., extending Monday’s 7.3% plunge that pushed the gauge to the lowest since 2008. China’s benchmark CSI 300 Index also slipped. The weakness contrasts with solid performance in global stocks, with the US and European stocks ending Monday higher.
The moves underscore investor jitters following the nation’s twice-a-decade Communist Party congress, where Xi loyalists dominated key posts. Xi’s unfettered control over the nation’s power structure suggests policies like Covid Zero and the state’s curbs over private enterprise will likely continue, dimming the outlook for the nation’s financial assets.
“This is normally what happens after a big plunge -- the next day the market will generally nursing from its wounds and then decide which direction to go,” said Hao Hong, partner and chief economist at Grow Investment Group. “As clearly there is no anchor to how low the market can fall, few dare to buy right now.”
The yuan tumbled to the weakest since 2007 after the People’s Bank of China loosened its grip on its tightly-controlled currency fixing by setting the rate at a 14-year low.
Foreigners turned net-buyers of Chinese stocks early Tuesday after a record selling in the previous session, when they offloaded a net 17.9 billion yuan ($2.5 billion) of mainland shares via trading links with Hong Kong.
Meantime, news about the market selloff was mostly absent from China’s top securities newspapers on Tuesday, with front pages dedicated to other key meetings and events following the Party congress.