Jie Zhao/Getty Images
- Hong Kong's benchmark Hang Seng Index closed 20% lower from its most recent high on Friday.
- That puts it in bear market territory, with investors growing cautious on Chinese investments.
- China's economy is facing a troubled property market, deflation, and weak trade.
The Hang Seng Index, Hong Kong's benchmark, declined 2.1%, hitting 17,950.85 to close in bear market territory on Friday, down more than 20% from its most recent high in January.
Growing concerns around China's ailing economy have made investors more cautious around Chinese investments, and the index has declined 5.9% since last Friday. Key names on the exchange including Tencent, Alibaba, and HSBC moved lower 2.34%, 3.44%, and 1.1%, respectively.
Bloomberg data shows that foreign investors have sold roughly $7.1 billion of yuan-denominated stocks so far this month. Traders have also pulled back their bets on China's yuan, with the currency falling toward its weakest level since October at 7.287 per dollar.
The pandemic rebound Beijing had anticipated has not yet happened, and instead recent headlines have highlighted China's deflation, softening trade, risks of a 1990s-style "Japanification," and an aging population.
Most notably, however, is the unstable property market, which just saw Evergrande file for Chapter 15 bankruptcy, as well as two missed payments from developer Country Garden Holdings. Chinese trust company Zhongrong International has also missed repayments on dozens of investment products since July.
In the US, meanwhile, stocks traded mostly flat Friday, with each of the major indexes on pace for weekly losses. The Dow is heading for its worst week since March, while both the S&P 500 and Nasdaq Composite look set to log their third straight losing weeks.