Too early to buy China’s favourite stocks as ChiNext’s worst performance in Asia vindicates market bears

Name: Luxury shopping centres open new battleground for China’s electric car makers
Uploaded: 2022-02-10T23:30:20.000Z
Duration: 2 min 52 s
Description: Luxury shopping centres open new battleground for China’s electric car makers

Kweichow Moutai, Contemporary Amperex Technology and Eve Energy are among the biggest losers this year as key indices slide

The main risks for onshore stock market include a potential capital flight from emerging markets as the Fed tightens policy and the US dollar strengthens

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Pedestrians wait to cross a road in front of a public screen displaying stock index levels in Shenzhen, China. Photo: Bloomberg

Cheryl HengandZhang Shidong

Published: 7:30am, 11 Feb 2022Updated: 4:34pm, 11 Feb 2022

China’s most valuable companies have suffered the brunt of selling in trading after Lunar New Year, as the market was among the worst performing in Asia this year, vindicating stock bears who said it was too early to buy the dip.

Kweichow Moutai, the nation’s biggest liquor distiller, has lost almost 1 per cent to extend its slide this year to 8.6 per cent, contributing to an 8 per cent loss in the CSI 300 Index. Battery makers Contemporary Amperex Technology and EVE Energy have tumbled by 12 and 23 per cent each, dragging the ChiNext to a 15 per cent slump.

Companies with rich valuations have lost their mojo elsewhere too, such as the 25 per cent one-day plunge in Facebook owner Meta Platforms, as the Federal Reserve turned hawkish to counter surging inflation. In China, the sell-off has been concentrated in consumer and renewable energy players.

These stocks trade at “above the historical average in valuation and some sectors and companies even trade at record levels”, said Chen Ping, a fund manager at HSBC Jintrust Fund Management in Shanghai. “That is been worrisome to investors. It’s a confluence of headwinds and it’s hard to predict when this correction will end.”

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Luxury shopping centres open new battleground for China’s electric car makers

Analysts have cautioned against turning bullish on Chinese stocks too soon, as they wait for more signs of economic stability. Policy easing measures will need to go the distance and revive credit growth before investors plough more money into the market, according to US money manager Thornburg Investment Management.