A key gauge of Chinese stocks was again poised to enter a bear market, as a weak economic recovery and tensions with the US continued to exert pressure.
The Hang Seng China Enterprises Index dropped as much as 2% on Wednesday, taking its losses from a peak of 27 Jan. 27 to more than 20%. Meituan, Alibaba Group Holding Ltd. and Alibaba Group Holding Ltd. were among the biggest drags on the stock market. The gauge has lost about 8% since February, making it the worst monthly performance since February.
Is there any prospect of a rebound in Chinese stock market in the near future?
Data released Wednesday showed China's manufacturing activity in May has contracted for a second consecutive month, providing the latest proof that the world's second-largest economy is stalling.
The data will surely have some negative impact on the market, but this is not entirely überraschend and the market has already priced in some of the weakness, said Yan Kaiwen, an analyst at China Fortune Securities. But the room for a further slide will be limited. Despite risks, geopolitical risks are also hurting sentiment. The US has accused China of an unnecessarily aggressive maneuver after a Chinese fighter jet swerved in front of a US reconnaissance aircraft over the South China Sea. The countries' defense chiefs also declined a request from Washington last week to meet.