China is facing its worst October month as many foreign investors are dumping 9.7 billion Yuan, that is, $1.4 billion of shares through the exchange with Hong Kong on Monday. Several bulls have disposed of their shares. Among them, the most sold traders overseas are Ping An Insurance (Group) Co., Kweichow Moutai Co., and Hangzhou Hikvision Digital Technology Co. The situation has made many foreign investors start panic selling every share because nobody knows what will happen next.
Why is the market falling in China?
Excessive selling of shares has made China lose its currency against the US dollar, which is still growing globally. Moreover, Xi’s long lasting tenure has made the US add restrictions on Chinese chip firms, which are one of the most popular from the tech sector and have been hitting the sector. But now, the situation is reversing around the country.
Growth of China
Although China is trying to beat the race and come on track, it is still facing its worst year in more than 40 years. The Chinese economy is running at the pace of 3.9 percent GDP growth, it will still need more to compete with the world. Many factors have contributed to this condition in China like unstable political parties, lack of voices among the leaders, etc.
On the contrary, India has been flourishing by becoming an attractive destination for foreign traders, with growth even bigger than most of the developed countries. Even the International Monetary Fund (IMF) comments positively on the growth.
Hong Kong suffering more this year
Hong Kong has reached its worst scenario since the 2018 financial crisis. Foreign traders have dumped a total of $2.5 billion Chinese shares. According to the Hang Seng (HSI) Index, 6.4% has dropped. This is the first biggest drop since November 2008. As Xi’s tenure is likely to continue for years, reforms are unlikely to change. Also, China’s zero covid policy has spread fear among investors as that will contribute to the further shutting down of the economy. The matter is becoming so severe that to tackle the problem a Central Economic Work Conference is planned in December. Until then, the market of China remains unfavorable.
What is Panic selling?
Panic selling is large Scale sell off of a stock or an entire market because of fear, rumor, and reacting to emotion rather than reasoned analysis. It occurs when stocks rapidly start declining with no hope of stability in the future.
If the investors continue running from the market, the Chinese economy may face huge financial emergencies unless the policies are revised as quickly as possible.