Yahoo Finance Chinese stocks notch their worst day in over a year as economic turmoil keeps global investors bearish
The Hang Seng China Enterprise index dropped 3.9% on Wednesday.
The decline marks its worst trading day since October 2022, per Bloomberg.
China faces a slate of macro headwinds including a property downturn and demographic challenges.
Bearishness on China's economy hit the country's stock market hard last year, and the pain isn't letting up so far in 2024.
Chinese stocks sold off in Asia trading hours Wednesday, with the Hang Seng China Enterprises index dropping 3.9% for its worst day since October 2022. The CSI 300 index declined 2.2%, with global investors selling roughly $1.8 billion in stocks on a net basis, according to Bloomberg data.
The People's Bank of China has cautioned that the economy faces a difficult year ahead, and on Monday policymakers unexpectedly opted to keep a key interest rate unchanged, while markets had anticipated a cut.
Still, some analysts at BlackRock and JPMorgan Asset Management consider Chinese stocks attractive and poised for a rebound. Yet bearishness from foreign investors and mixed results from government stimulus efforts, as well as softening consumer sentiment, muddy the outlook.
The world's second-largest economy has struggled to rebound since lifting pandemic lockdowns at the end of 2022, and Beijing has been navigating a property slump and tepid economic growth. In December, the country's factory activity hit its lowest level in six months as demand petered out.
Meanwhile, demographic challenges including historic youth employment and a shrinking population have also tempered optimism. Lower birth rates and macroeconomic obstacles weigh on consumer sentiment, which in turn can pull down consumer spending and drag on businesses, earnings, and valuations — ultimately giving investors reason for their continued bearish outlook.
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