China’s stock market had an unfavorable start to May, with all three major stock indices falling.
On Thursday, Chinese stocks resumed trading after the May Day holiday, with the three major indices falling, and the Growth Enterprise Market (GEM) index falling up to more than 4% and closing down more than 2%. Vaccine stocks fell across the board and travel-related shares were weaker on news that the U.S. abandoned its patent for a new pneumonia vaccine.
On May 6, the first trading day of Chinese stock market in May, Shanghai opened slightly lower, pulled up once during the session and sank again at the end of the session; the SZ index and GEM index were weak, SZ index fell more than 2% during the session, GEM once plunged more than 4%, the decline narrowed after lunch, and GEM index returned to above 3000 points.
By the end of the day, the Shanghai index fell 0.16% to 3441.28 points, the deep into the index fell 1.58% to 14210.6 points, the GEM index fell 2.48% to 3014.81 points; the two cities have a total turnover of 875.5 billion yuan.
The U.S. Trade Representative said the U.S. would support a proposal to exempt intellectual property protection for Chinese communist virus vaccines in an effort to increase the global supply of vaccines. The proposed exemption would mean that other pharmaceutical companies would be able to produce generic vaccines, which in the short term would increase competition from existing vaccine companies.
As a result of the news, vaccine stocks plummeted across the board, with Kangxinuo down more than 14%, Watson Biologicals down more than 10%, Fosun Pharmaceuticals and Tibetan Pharmaceuticals down, and ZhiFei Biologicals down nearly 9%.
Tourism sector fell in the top, *ST Tengbang, Zhangjiajie, Guilin tourism, Tianmu Lake fell, Xi’an tourism, Zongxin tourism, Huangshan tourism are down more than 9%.
Guohai Securities pointed out that the scenic spots still have factors such as epidemic prevention and restriction, “May Day” domestic tourism revenue has not yet returned to the level of 2019 before the epidemic.
Medical beauty plate plunged, Fosun medicine, Lu Shang development, Huadong medicine fell, Aimek plunged nearly 9%, Huaxi biological, Betaini, Aoyuan beauty valley, etc. have plunged.
The liquor sector sank, Gujing Gonjiu fell, Luzhou Laojiao fell more than 6%, Yanghe fell nearly 5%, Wuliangye fell 3%, Maotai fell more than 2%.
As for the reasons for the A-share decline, analysts at Founder Securities said in a report that domestic liquidity conditions in China have tightened slightly compared with March and April, with interest rates easy to rise but difficult to fall; given the overvaluation of certain segments of the market, the chance of a full recovery in risk appetite is now low, while it is difficult to see a directional change in U.S.-China relations.
Reuters reports that tensions between China and other Western countries are also dampening confidence.
On Thursday, the Communist Party’s Development and Reform Commission “indefinitely” suspended all activities of the China-Australia Strategic Economic Dialogue, the latest setback in strained relations between the two countries.
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