Shanghai’s stock index ends 2018 as the world’s biggest loser as trade war, slowing Chinese economy weigh on confidence
The Shanghai and Shenzhen markets together lost US$2.4 trillion in value in 2018, about the size of France’s economy.
Shanghai’s stock benchmark ended 2018 as the world’s worst market performer for a second year, falling 24.6 per cent over 12 months as an unprecedented trade war between China and the United States weighed on the Chinese economy and crimped corporate earnings.
The city’s key stock index closed the year at 2,493.90, while the benchmark on the smaller Shenzhen bourse fell 33.2 per cent during the period to 1,267.87. The combined capitalisation of the two exchanges fell by US$2.4 trillion to 43.3 trillion yuan (US$6.3 trillion) during the year, overtaken by Tokyo as Asia’s largest equity market.
“The stock market is often the barometer of a nation’s economic health, and the weakness in China’s A-share market reflects the serious troubles in the Chinese economy,” said Li Wenhui, an analyst for Huatai United Securities.
China’s industrial profits drop for first time in three years due to trade war impact
China’s economic growth slowed to 6.5 per cent in the third quarter, the slowest pace since quarterly data began to be compiled in 1992.
Worse is still to come, as the full impact of the trade war takes time to work its way into the corporate accounts and household budgets in the world’s second-biggest economy. Growth could slow to 6.2 per cent in 2019, which would be the weakest annual clip in almost three decades, according to a Nikkei survey of 32 economists.