Xi Jinping's Zero-COVID Resolve and US Stock Market Crash Impact... Sharp Decline in China and Hong Kong Stock Markets

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Chinese and Hong Kong stock markets plunged sharply on the 6th due to confirmation of the Chinese leadership's commitment to the 'Zero COVID' policy and the impact of the New York stock market crash.

According to Bloomberg News, the Shanghai Composite Index, the representative index of the Shanghai Stock Exchange, closed at 3001.56, down 2.16% from the previous trading day. The Shenzhen Index also closed at 10,809.88, down 2.14%. The Hong Kong Hang Seng Index was trading at 19,983.58, down 3.89% as of 3:47 p.m. local time. The Hang Seng Tech Index, which tracks the stock price trends of major technology stocks, plummeted more than 5%.

The reason for the decline in major indices in China and Hong Kong is the delayed reflection of the Federal Open Market Committee (FOMC) results in the New York stock market crash the previous day, and the Chinese leadership's declaration of its determination to push forward the 'Zero COVID' policy, which deals a significant blow to the domestic economy, leading to weakened investor sentiment.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,997.97, down 3.12% from the previous session. The S&P 500 Index fell 3.56% to 4,146.87, and the Nasdaq Index plunged 4.99% to 12,317.69. The decline rates of the Dow and Nasdaq were the largest since 2020.

The Politburo Standing Committee, the highest leadership body of the Chinese Communist Party, emphasized the day before, "We will firmly adhere to the overall policy of dynamic zero COVID without any wavering and resolutely fight against all words and actions that distort, doubt, or deny our country's epidemic prevention policy."

The decline in the Hong Kong stock market, where major Chinese tech stocks such as Alibaba and Tencent are mainly listed, was even greater. As the number of companies designated as 'preliminary delisting' targets by the U.S. securities regulatory authorities continues to increase, concerns over forced delisting of Alibaba, Baidu, JD.com, and others have resurfaced in the market.

This content was produced with the assistance of AI translation services.