The Hong Kong Stock Exchange sank to its lowest level since 2009 today after Chinese leader Xi Jinping won a third term and elevated allies to key positions, wiping out the regime’s reformist wing.
The Hang Seng index fell as much as 6.5% during the afternoon session to around 15,150 points, the lowest level since the 2008 global financial crisis.
Chinese e-commerce giant Alibaba Group fell more than 11% to HK$61.75, its lowest ever. Tencent Holdings, which owns Wechat, the most-used social network and digital wallet in China, dropped 10% to HK$209. The Meituan home delivery group fell 14.5% to HK$121.
China’s main construction companies also recorded double-digit drops.
Xi Jinping secured a third term as general secretary of the Chinese Communist Party (CCP) on Sunday after the party’s 20th Congress concluded.
The new formation of the Politburo Standing Committee, the summit of power in the Asian country, now includes four of its allies and excludes Prime Minister Li Keqiang and Deputy Prime Minister Hu Chunhua.
The two were seen as the only representatives of the faction of former President Hu Jintao, who on Saturday was apparently forced to leave the congress during the closing session.
Xi thus removed representatives of the Communist Youth League, considered the most liberal and pragmatic faction of the country’s leadership, from the top of power.
The risk to Chinese equities “is expected to remain high in the short term, possibly due to investor concerns about the absence of market-oriented economic reformers in the new formation of the Politburo Standing Committee,” investment bank Goldman Sachs said. in a note sent to customers.
Several of the economic reforms launched by Xi Jinping in recent months as part of the Common Prosperity Campaign have reversed decades of economic liberalization, aiming to restore what Xi called the “original mission” of the Communist Party.
At the opening of the congress, the Chinese leader called for “better regulation of the mechanisms of wealth accumulation” and the “prevention of the disorderly expansion of capital”, signaling increasing scrutiny of private capital.
The drop in Hong Kong’s main stock index comes despite the Chinese economy having grown by 3.9% during the third quarter of the year, exceeding analysts’ expectations, according to official data released today.
