Growing Concerns Over 'Xi Jinping's Third Term'... Hong Kong Stock Market Crashes

Alibaba, JD.com Stocks Plunge Ahead of 'Gwanggunje' Festival
Yuan Falls to 7.25 per Dollar... Weakness Continues

[Image source=Reuters Yonhap News]

[Asia Economy Beijing=Special Correspondent Kim Hyun-jung] The Hong Kong stock market is plummeting to its lowest level since the 2008 financial crisis amid anxiety and concerns over the 'Xi Jinping 3rd term regime.' Companies such as Alibaba and JD.com, which should show a solid trend ahead of China's largest shopping event, Singles' Day, are leading the decline. Negative analyses of the mid-to-long-term leadership system are also dragging down the value of the yuan.

As of 2:15 PM on the 24th, the Hong Kong Hang Seng Index is at 15,158.34, down 6.49% from the previous trading day. This is the lowest level since the global financial crisis in 2008. The Hong Kong H-Share Index (HSCEI), composed of mainland Chinese companies listed on the Hong Kong stock exchange, plunged 7.18% to its lowest level since 1994, while the Shanghai Composite Index fell 2.23%, and the Shenzhen Composite Index retreated 2.06%.

Big tech and consumer goods companies listed on the Hong Kong Exchange are repeatedly plunging. Delivery app Meituan dropped 14.12%, JD.com 12.98%, and Baidu 11.59%. Tencent and Alibaba also led the decline, falling 9.54% and 11.35%, respectively.

The Chinese yuan also fell intraday to 7.2552 yuan per dollar, marking its lowest level since January 2008.

This sharp decline appears to be a consequence of the process of Xi Jinping's third term and the appointment of the top leadership revealed through the 20th National Congress of the Communist Party last week and the 1st Plenary Session of the 20th Central Committee. Concerns reflect Xi's consolidation of power by removing all opposing forces, strengthening pressure on private companies through a strong one-man system, and the increased likelihood of maintaining the zero-COVID policy if necessary.

[Image source=Reuters Yonhap News]

Bloomberg cited analysis from Dicky Wong, an analyst at Kingston Securities in Hong Kong, saying, "The Hong Kong stock market is witnessing panic selling," and "The ongoing conflict between China and the U.S. continues to dampen sentiment and increase uncertainty." Justin Tang, Head of Asia Research at United First Partners, stated, "The market is worried that with too many Xi Jinping supporters elected, Xi's power is solidifying further, potentially leading to market-unfriendly policies."

Duncan Reilly, Chief China Economist at UK consulting firm Pantheon Macroeconomics, explained, "The more centralized the power, the greater the risk of policy implementation strictly following top-level directives," adding, "This was evident in some of the (COVID-19) lockdowns in the second quarter."

On the other hand, China's third-quarter GDP growth rate, which was initially scheduled to be announced on the 18th but was suddenly released on this day, stood at 3.9%, surpassing Bloomberg's forecast of 3.3%. It also showed a clear recovery compared to the sluggish 0.4% growth in the second quarter. However, retail sales in September increased by only 2.5%, and exports in September rose 5.7%, showing a slower recovery compared to the previous month's 7.1%.

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