After six years, the Hang Seng Index fell below 20,000 points again. The last time it dropped below 20,000 points was shortly after the A-share 'circuit breaker' in 2016. The Hang Seng Tech Index experienced a single-day drop of more than 10% for the first time since its establishment over a year ago.
US-listed Chinese concept stocks also experienced an epic plunge. The ETF KWEB, which tracks China's internet-related stocks, has dropped by 28% in the last three trading sessions, including a 12% drop last evening.
The market sentiment of Chinese concept stocks and Hong Kong stocks is difficult to express with panic. If calculated from the high point on February 18th of last year, the Hang Seng Index and Hang Seng Tech Index have retraced 37% and 66% from the high points respectively.
During almost the same period, the Chinese concept stock KWEB has fallen by 78% from its high. The declines of many stocks are even more severe, with over 30 Chinese concept stocks retracting by over 90% from their highs.
Such declines are already comparable to major stock disasters recorded in history. It's worth noting that during the bursting of the internet bubble in 2000, the Nasdaq Index took a year and a half to fall by 72%; during the 2008 global financial crisis, the S&P 500 Index retraced up to 57%; and during the liquidity crisis in the early stages of the pandemic in March 2020, the S&P only dropped by 34%.
A significant market decline is often not caused by a single factor, with a complex array of bearish news repeatedly affecting investor sentiment. We believe that this round of major falls, especially in the significant adjustments of US-listed Chinese concept stocks and Hong Kong stocks, is due to at least the following reasons:
First of all, in the current environment, the USA inflation continues to rise, market concerns about the economy accelerating into recession, and central banks such as the Federal Reserve are reluctantly tightening...