2024

United

Omicron

<p>The Chinese stock market experienced a nightmarish day on Monday, with the CSI 1000 index plummeting by nearly 8%. This index includes small and medium-sized enterprises listed in China. Amid investor panic, about 30% of stocks were suspended due to a 10% drop limit imposed by the authorities.</p>
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     <p lang="en" dir="ltr">BREAKING: Nearly 30% of all stocks in China have been halted as China's CSI 1000 index slides 8% in a matter of hours.<br><br>Chinese stock market indices today:<br><br>1. CSI 1000: -8%<br>2. Star 50: -5%<br>3. Beijing 50: -4%<br>4. Shenzhen: -4%<br>5. Shanghai Composite: -3%<br><br>Meanwhile, the CSI 100 and… <a href="https://t.co/5s6gddKYNS" rel="noopener noreferrer nofollow">pic.twitter.com/5s6gddKYNS</a></p>— The Kobeissi Letter (@KobeissiLetter) <a href="https://twitter.com/KobeissiLetter/status/1754374555357909245?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">February 5, 2024</a>
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  Stock market crisis in China: small caps in free fall
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<h2 id="h-stock-market-crash-in-china-what-are-the-factors">Stock Market Crash in China: What Are the Factors?</h2>
<p>For the past few days, the <a href="https://www.cointribune.com/en/stock-market-china-in-free-fall-with-a-staggering-loss-of-6-trillion-dollars/" target="_blank" rel="noopener noreferrer nofollow">Chinese stock market</a> has been struggling to recover. The reasons for this crash are multifaceted:</p>
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<ul>
 <li>fear of monetary tightening by the Chinese central bank;</li>
 <li>the spread of the Omicron variant of Covid-19;</li>
 <li>geopolitical tensions with the United States,</li>
 <li>financial scandals involving companies like <a href="https://www.cointribune.com/en/the-liquidation-of-evergrande-could-push-china-towards-crypto/" target="_blank" rel="noopener noreferrer nofollow">Evergrande</a> or Didi.</li>
</ul>
<h2 id="h-chinese-stock-market-in-crisis-sectors-most-affected-by-the-debacle-of-small-caps">Chinese Stock Market in Crisis: Sectors Most Affected by the Debacle of Small Caps</h2>
<p>The sectors that suffered the most from the fall of the Chinese stock market are those that had benefited from the pandemic. This includes <strong>technology, consumer goods, and health care</strong>.</p>
<p>The Star 50 index, which includes innovative companies, lost 5%. As for the Beijing 50, Shenzhen, and Shanghai Composite indices, they have <strong>retreated by 4% to 3%</strong>. These indices reflect the performance of small caps, which represent about 80% of the Chinese stock market.</p>
<p>These companies are also more affected by the increased regulations imposed by Beijing on strategic sectors such as the internet, education, and security.</p>
<h2 id="h-reasons-for-the-resilience-of-large-chinese-companies">Reasons for the Resilience of Large Chinese Companies</h2>
<p>Large Chinese companies seem to be weathering the <a href="https://www.bloomberg.com/news/articles/2024-02-05/china-stocks-languish-despite-renewed-vow-to-stabilize-markets" target="_blank" rel="noopener noreferrer nofollow">storm</a>. The CSI 100 and Hong Kong 50 indices, which represent large capitalizations, even <strong>ended the session on the rise</strong>: by 0.5% and 0.8% respectively.</p>
<p>These companies benefit from:</p>
<ul>
 <li>their exposure to international markets,</li>
 <li>their support by the Chinese government,</li>
 <li>their lesser dependence on domestic economic conditions.</li>
</ul>
<p>Some stock market experts expect volatility to persist in the coming days. Others, however, see in this correction <a href="https://www.cointribune.com/en/uncertainties-push-china-into-the-arms-of-cryptocurrencies/" target="_blank" rel="noopener noreferrer nofollow">a buying opportunity</a>. Case to follow…</p>

China Stock Market: Small Cap Stocks in Free Fall

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