Let’s just say Chinese stocks did not start July on a positive note after falling into a bear market late last month. In fact, the SHCOMP dove 2.5% on Monday, a disconcerting turn of events considering Friday’s bounce, which some folks were hoping might have legs:
Index giants were the hardest hit on Monday. Industrial & Commercial Bank of China, for instance, dove nearly 5%, for its worst day since February.
Poly Real Estate Group (a big Chinese developer) saw its shares drop more than 9% to start the week – that was the worst single-day decline since 2015:
Meanwhile, the yuan fell again, to its weakest against the dollar since at least October:
Over the weekend, PMI data for June showed the Chinese economy holding up reasonably well, but the new export orders sub-index of the manufacturing PMI fell into contraction territory and that’s being billed by many as one of the first signs that Trump’s trade war is starting to show up in the data.
Mainland Chinese shares are not in good company down here. The Shanghai Composite’s 22% loss since the January highs is only eclipsed by Argentine equities:
To be clear, this isn’t entirely surprising given the fact that exactly nothing has changed in terms of fundamentals since Friday and given the fact that trade tensions are higher now than they were a couple of days ago.
If you want more detail on the yuan situation, there’s a ton in our week ahead preview, but for now we’ll just leave you with what one Liang Jinxin (of Tianfeng Securities) told Bloomberg on Monday:
It would be a bad time to buy right now.
Let the games begin !………