For the first time in its 22-year history, Golden Dragon Index slumps 10% for a second consecutive dayA pedestrian walks past an electronic screen displaying the Hang Seng Index, left, and the Hang Seng China Industry Top Index in Hong Kong. Picture: BLOOMBERG/CHAN LONG HEI
The broad rout follows a report citing US officials that Russia has asked China for military assistance for its war in Ukraine. Even as China denied the report, traders worry that Beijing’s potential overture towards Vladimir Putin could bring a global backlash against Chinese firms, even sanctions. Sentiment was also hurt by a Covid-19-induced lockdown in the southern city of Shenzhen, a key tech hub, and the northern province of Jilin.
Investors have reason to be jittery after several big-name funds reported significant losses related to Russia. BlackRock’s funds exposed to Russia have plunged by $17bn since the war began. Even amid the rout, mainland traders have continued to snap up Hong Kong stocks, though that’s proving insufficient to buttress share prices. They have been net buying Hong Kong equities via the stock connect in every session since February 22, loading up $1bn on Monday, the most since January. The historic slide in tech stocks is baffling China bulls, the number of which had grown this year as strategists bet on a rebound thanks to policy easing by the People’s Bank of China.