"Worst Performance Since 2016"... Chinese Stock Market Shaken from the Start of the Year

CSI300 Index Falls Over 5%... Worst Since 2016

Attributed to Economic Slump and US-China Tensions

Shanghai and Shenzhen Indices Also Down 5% This Year

Last Year's GDP Growth Rate to be Announced on the 17th

The Chinese stock market recorded its worst performance in nine years, falling over 5% in the first seven trading days of the year.

On the 10th, the Shanghai Composite Index closed at 3,168.52, down 42.87 points (1.33%) from the previous trading day. The Shenzhen Component Index ended at 9,795.94, down 180.06 points (1.8%). During the first seven trading days of this year, the Shanghai and Shenzhen indices fell by 5.36% and 5.81%, respectively. The CSI300 Index, composed of large-cap stocks from the Shanghai and Shenzhen stock exchanges, also closed down 47.40 points (1.25%) at 3,732.48, expanding its decline to 5.07% for the year. This marks the worst performance at the start of the year since 2016.

This slump occurred despite efforts by Chinese authorities to boost the stock market. Reuters reported on the 7th that the Chinese stock exchange pressured at least four major mutual funds to refrain from selling stocks at the start of the year. According to Reuters, the Shanghai and Shenzhen stock exchanges requested these fund companies to cover the difference by making additional purchases if the amount sold exceeded the amount bought.

The weakness in the Chinese stock market is attributed to a combination of domestic economic sluggishness and geopolitical risks stemming from US-China tensions. On the 6th, the U.S. Department of Defense blacklisted six companies, including CATL and Tencent, citing links to the Chinese military. On the 8th, it was reported that the Joe Biden administration is considering additional sanctions on AI chip exports.

Meanwhile, China's GDP for the fourth quarter of last year will be announced on the 17th. The market is watching to see if China's economy met its growth target of 'around 5%' last year. Recently, the United Nations estimated China's economic growth rate for last year at 4.9%.

Lim Dayeon, Hankyung allopen@hankyung.com