Investors stand in front of a board showing stock information at a brokerage house on the first day of trading in Hangzhou since Lunar New Year in China since the first day of trading.
China's tech stocks crashed to new lows on Friday and Hong Kong's benchmark index hit an almost 10 - month trough as a constant drip feed of crackdowns crushed investors' confidence.
The Hang Seng fell 1.8% and its weekly drop of 5.8% was the largest since the height of the pandemic panic in financial markets in March 2020.
Stocks in Shanghai also sold, while investors sold risky corporate debt and the Chinese currency. The yuan was poised for its biggest weekly loss in two months as investment banks were rushed to safety amid ongoing coronavirus concerns. This week, China announced tougher rules on data use and competition in the tech sector, summoned executives at Evergrande to warn them on debt management and state media reported looming regulations for liquor makers.
On the heels of crackdowns on an array of private companies spanning sectors from steelmaking to e-commerce and education, it has all but sapped confidence in a market which seems yet to find a floor after months of selling.
There isn't really one trigger, but many bits and pieces that add to the narrative to stay away from China, said Dave Wang, a portfolio manager at Nuvest Capital in Singapore.
Almost on a daily basis you have negative news coming out, so it forms the impression there's no end in sight.
Alibaba shares in Hong Kong stock exchange Alibaba fell 2.6% to the all time low and have halved from an October peak. Gaming and social media giant Meituan hit a 14-month low and food deliveryer Tencent touched a one-year low.
The Shanghai CompositeShanghai Composite rose from 1.1% to its lowest close in more than two weeks and blue chips fell 1.9%, with liquor makers leading losses. Hong Kong's Hang Seng Tech index fell 2.5% and touched its lowest since its inception last year.
It is down about 48% from a February peak as markets struggle to put a price on the risks ahead https: www.reuters.com business finance valuing-china assets-no - easy-task - after 1-trillion-wipeout - 2021 - 08 - 16. Alibaba, for example, command its lowest price-to- earnings ratio since its listing on New York in 2014.
There's a herd mentality at the moment, people see one person selling and then they do the same, said Louis Tse, director of Hong Kong brokerage Wealthy Securities.
On top of that, recent data points to a slowdown in the world's second largest economy as new COVID - 19 outbreaks and travel curb demand while high raw material costs weigh on factory output. Policymakers' persistence with debt caps on properties developers is also beginning to stoke nerves.
Jittery debt markets sold a little bit after Evergrande's meeting with regulators and overall premium buyers demand for China's risky corporate bonds is widening at a time when it is shrinking elsewhere.
The yuan has fallen to its 200 move average over a broadly rising U.S. dollar and weakened past the psychological 6.5 per dollar mark, hitting a three week low of 6.5059 during onshore trade on Friday.
The Hong Kong dollar has dropped close to its weakest since 2012, and a half, suggesting even more money moving out of the city.