As China stocks slide and Evergrande teeters, trading sinks amid US$955 billion market wipeout in Hong Kong, Shanghai and Shenzhen
- Traded volume in Hong Kong’s stock market slumped to a one-year low on September 20, or 38 per cent below the average in the first half
- Some US$955 billion has been erased from stock capitalisation in Hong Kong, Shanghai and Shenzhen so far this year
Average trading volume in Hong Kong has shrunk to less than HK$94 billion (US$12 billion) per day this month, a level not seen since September last year. The Shenzhen and Shanghai exchanges processed a combined 723 billion yuan (US$97 billion) of transactions per day, the lowest since May 2020, according to Bloomberg data.
Activity was lowest in the city this year on September 20 when HK$71.3 billion changed hands, a 38 per cent slump from the first six months this year. On the mainland, the low was 575 billion yuan on September 20, or 39 per cent off the pace in the January to June period.
The numbers suggest investors at home and abroad are abandoning the markets, discouraged by the poor outlook for Asia’s biggest capital market. Beijing has shunned a bazooka-style stimulus after a short-lived post-pandemic euphoria, abetting a US$955 billion market wipeout across the three exchanges this year.
“This is typical bear market behaviour,” said Hao Hong, partner and chief economist in Hong Kong at Grow Investment Group, a Chinese hedge fund. “From a trading point of view, the market here is trending badly. Not many want to be the contrarian.”
Foreign investors sold US$15 billion worth of A shares during the past seven weeks, the largest cumulative sell-off on record, according to Goldman Sachs. Global hedge funds’ net allocations to China have also declined to 8 per cent of their books, approaching the low seen in October last year, the US bank said. BlackRock strategists this month cut their tactical view to neutral on the property market drag.