REUTERS/China Daily
- Chinese stocks have wiped out all of their gains since the nation reopened its economy.
- The CSI 300 Index slumped on Friday, briefly slipping below its October 2022 low.
- Investors are fretting over the slew of economic headwinds Beijing currently faces.
Chinese stocks just wiped out all of their gains since Beijing ended its zero-COVID policy, a sign that investors are still fretting over the ongoing property crisis and other headwinds facing the economy.
The CSI 300 Index slumped 0.7% on Friday to end the day at 3,510, representing 16% decline since the index peaked in late January.
At one point during Friday's trading session, the index slipped to trade around 3,502. That's even lower than when Chinese stocks troughed last October, right before the nation announced it would start to dial back its strict lockdown measures.
Those losses come amid a so-far disappointing economic recovery for China, which has been slammed this year by poor consumer demand, growing trade tensions with the US, and turmoil in its property sector, where the ballooning debts of previous years are now boiling over.
Those headwinds have been exacerbated by recent conflict in the Middle East, with the Israel-Hamas war sparking a sell-off in Chinese and Hong-Kong listed stocks as investors worried over possible spillover effects.
Over the past week alone, foreign investors dumped a net 24 billion yuan, or $3.3 billion, of onshore Chinese stocks, the most since mid-August, according to Bloomberg.
That added to the market retreat after international investors pulled out a record $12.3 billion from onshore stocks in August.
China has rushed to staunch the bleeding from its equity markets. Last weekend, regulators said they would ramp up their oversight of "various arbitrage activities" occurring in the market.
And on October 30, regulators will crack down on stock speculation by requiring hedge funds to hold 100% of the value of the trade in their accounts, while other short-sellers need to hold at least 80%.
Meanwhile, policymakers have been loosening financial conditions to stimulate the economy. China's central bank injected about $113 billion in short-term policy loans into its banking system on Friday. It had already pumped $85 billion in short-term loans and $107 billion in medium-term loans into the banking system earlier this week.
Still, experts are warning of a grim future ahead of China as it battles a slew of economic headwinds. The nation is likely headed for a full-blown financial crisis, according to market veteran Ruchir Sharma, while others have warned of a "lost decade" of economic stagnation ahead.