In a startling turn of events, China’s stock market faces unprecedented turmoil as nearly 30% of all stocks come to a grinding halt, with small caps limited down in an alarming 8% freefall within a matter of hours. This financial upheaval sparks concerns, hinting at an impending storm in the Chinese market.
The tumultuous scene unfolds with Chinese stock market indices experiencing significant disruptions:
CSI 1000: -8%
Star 50: -5%
Beijing 50: -4%
Shenzhen: -4%
Shanghai Composite: -3%
However, amidst the chaos, the CSI 100 and Hong Kong 50 indices, representing Chinese large caps, oddly remain in positive territory. The paradoxical situation raises eyebrows as Chinese small cap stocks crumble while their larger counterparts appear unfazed.
China, in a bid to counter the decline in small caps, has implemented various stimulus measures, including short selling bans and promises to stabilize markets. Yet, the CSI 1000 index continues to face relentless pressure.
The market turmoil signals a deeper issue, especially considering the CSI 1000’s 30% decline in the first month of 2024 and a staggering 21% plunge over the last 10 days. Despite multiple pledges from the Chinese government to stabilize markets, the volatility persists.
Adding to the economic complexity, last week witnessed the court-ordered liquidation of Evergrande, China’s largest property developer. This event, coupled with a slew of stimulus measures, casts a shadow over the stability of the Chinese financial landscape.
In a noteworthy development, China resumes reporting on youth unemployment after a hiatus. The figures for December reveal a youth unemployment rate of 14.9%, excluding college students. This move comes a year after the suspension of reporting, which had indicated a troubling 21.3% youth unemployment rate in June.
As China grapples with economic uncertainties, the dichotomy between large and small cap stocks, along with the halt and limited down scenarios, underscores the intricacies of its financial challenges. Investors and analysts are left pondering the broader implications and whether the storm brewing in China’s stock market could have far-reaching consequences on the global economic landscape.
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BREAKING: Nearly 30% of all stocks in China have been halted as China's CSI 1000 index slides 8% in a matter of hours.
Chinese stock market indices today:
1. CSI 1000: -8%
2. Star 50: -5%
3. Beijing 50: -4%
4. Shenzhen: -4%
5. Shanghai Composite: -3%Meanwhile, the CSI 100 and… pic.twitter.com/5s6gddKYNS
— The Kobeissi Letter (@KobeissiLetter) February 5, 2024
China has attempted multiple forms of stimulus to halt the decline in small caps.
Even with short selling bans and promises to stabilize markets, the CSI 1000 is under pressure.
Something is happening in China.
Follow us @KobeissiLetter for real time analysis as this develops.
— The Kobeissi Letter (@KobeissiLetter) February 5, 2024
China's Plunge Protection Team has injected liquidity several times into their failing stock market only to be rejected each time. t.co/ZXJtb8i9i7 pic.twitter.com/WcQ5aXhCvj
— The Butcher of Wall Street Marcel Kalinovic (@BossBlunts1) February 5, 2024
What if China will dump UST in order to support their stock market 👀
— Kakashii (@kakashiii111) February 5, 2024
RESET WILL OCCUR
SWIFTLY –
FINANCIAL RESET –
OVERNIGHT. #MrPool— 𝓨𝓸𝓾𝓻 𝓯𝓻𝓲𝓮𝓷𝓭, 𝓑𝓵𝓸𝓷𝓭𝓲𝓮 (@myfriendblondie) February 5, 2024
After this morning's sharp fall, #China's CSI 1000 'Snowball' derivatives have essentially been triggered 'knock-in'. Only about 1.1 billion yuan worth of CSI 1,000 'Snowball' products remain untriggered, according to the data provided by securities institutions. t.co/ZQWfo7JIHJ pic.twitter.com/JnapYJCcQp
— CN Wire (@Sino_Market) February 5, 2024
This is wild. China CSI 1000 Index -7% pic.twitter.com/bIVvPLrqrO
— JaguarAnalytics (@JaguarAnalytics) February 5, 2024