(Bloomberg) — Chinese stocks resumed their decline as President Xi Jinping offered little sign of a shift away from Covid Zero in his key speech, disappointing investors who had been hoping for some loosening of restrictions to shore up the market.
Most Read from Bloomberg
The benchmark CSI 300 Index slid as much as 0.9% early Monday, after anticipations ahead of the twice-a-decade Party Congress contributed to a jump on Friday. A gauge of Chinese equities listed in Hong Kong also traded lower.
China stock traders have been looking to the leadership gathering for fresh market impetus after suffering losses that have been among the worst in the world. Xi’s renewed pledge for tech self-reliance may offer some reprieve, but overall, the lack of pivot away from Covid Zero and the absence of stimulus signals for the property sector came as a disappointment to investors.
The onshore benchmark is down more than 22% this year as investors grappled with a slowing economy and rising hostility between the US and China. Economists surveyed by Bloomberg predict growth of just 3.3% this year, the second-weakest pace in more than four decades.
Read: Xi Gives Little Reassurance Big China Economic Risks to Ease (1)
“Markets may be disappointed that it appears there is no change in Covid-zero policy and no clarity on an exit strategy,” said Marvin Chen, analyst at Bloomberg Intelligence. “There was also no signal on the property sector. These two issues are the top concerns for investors and overall the speech was relatively status quo on both of them.”
Some tech stocks had seen huge losses recently following the Biden administration’s restrictions on the sale of chip-related technology to Chinese customers, striking at the foundation of Xi’s efforts to develop the sector. Xi hit back in his Sunday speech marking the opening of the congress, promising to “resolutely win the battle in key core technologies.”
Read: China Traders See Tech Focus, More Covid Gloom After Xi’s Speech
On the CSI 300, sub-gauges on health care and information tech shares posted gains, while energy and consumer stable stocks were the worst performers. Meantime, Hong Kong’s benchmark Hang Seng Index also fell 0.7%.
The moves in China and Hong Kong stocks were largely in line with the decline across Asia, with the MSCI Asia Pacific index down more than 1%. Sentiment was weak overall following a Friday slump in US stocks.
(Updates with chart, analyst comment)
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
