Chinese stocks on track to enter bear market

A significant gauge of China's stocks was on track to enter a bear market as a weak economic recovery and tensions with the US left traders with little reason to buy.

On Tuesday, the Hang Seng China Enterprises Index fell as much as 0.7%, marking the fifth day of declines and taking its losses to about 20% from a peak on Jan. 27. The biggest loser was Meituan and Tencent Holdings Ltd.

The grim milestone deals a blow to investors who were betting on a revival after the reopened rally flopped at the end of January. Some investors in China are feeling frustrated, trimming portfolio allocations as they come to terms with a lackluster economic recovery and modest earnings.

China's economy is a dangerously competitive environment, with a range of niche products sounding alarming in every corner.

In a sharp reversal of fortunes from earlier this year - when buy calls were dominant - investors see a lack of catalyst for gains as the post-Covid recovery sputters and regulatory uncertainties still abound. Tussles with the US on a variety of issues continues to make investors wary, with Beijing's rejection of a US request on a defense chiefs meeting adding to the jitters.

The HSCEI gauge has lost about half of the gains seen in November-January. While some industries including artificial intelligence and state-owned companies have seen bouts of rallies, they haven't been enough to lift the broader market.

The CSI 300 Index was down as much as 0.5%, extending losses after wiping out all its gains for 2023. The Hang Seng Index was down 0.7% for the session.

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