Things went further off the rails for Chinese equities on Monday, as geopolitical jitters around a possible diplomatic row between Washington and Riyadh weighed on already fragile sentiment.
The Shanghai Composite fell 1.5%, just one trading day removed from the worst session since 2016. The index is now sitting at its lowest levels since late November 2014.
In addition to the usual suspects (e.g., trade concerns, geopolitical tensions), investors continued to fret over data showing a sharp deceleration in demand for passenger vehicles and appliances. Great Wall Motor plunged 9.4% on Monday, the most since January 2016.
The mood was similarly dour in Hong Kong, where the Hang Seng sank 1.4% coming of its third straight week of losses.
Remember the bounce in Tencent? No? Me neither. But it turns out shares staged their biggest rally since 2015 on Friday, a day after plunging for a record tenth consecutive session. Well, that bounce proved fleeting; the shares resumed their slide on Monday, falling nearly 2% to start the new week.
For now, there doesn’t look to be a light at the end of this tunnel. Mainland shares can probably rest assured that the National Team will step in at some point and that could indirectly support H-shares, but Hong Kong is at the mercy of global risk sentiment and is laboring under the threat of a bursting housing bubble now that rates are being forced higher by Fed hikes.