The Federal Reserve met on the 17th and decided to keep the monetary easing policy, inspiring global stock markets to rise together. However, according to expert observation, China’s Shenzhen, Shanghai and Hong Kong stock markets have recently hit back hard, and the decline has appeared earlier and heavier than the international market, which seems to imply a deeper meaning.
Xie Jinhe, chairman of Caixin Media, wrote in a Facebook article on the 18th that the Shenzhen stock market fell to the annual line all of a sudden, the Shanghai stock market fell below the semi-annual line, and the new economy stocks that originally held up the Hong Kong stock market, such as Alibaba, Tencent, Jingdong, Meituan, Xiaomi, BYD, etc., have all seen major declines recently.
GEM index dropped 25% in three weeks
The GEM index, which rose strongly last year, fell 25% in one index from a high of 3,476 on Feb. 18 to a low of 2,608 that appeared on March 9 this year. In addition, the Shanghai Science and Technology 50 Index fell from 1,726 points in July last year to a low of 1,212 points in mid-March this year, a 28% drop.
Xie Jinhe mentioned that Guizhou Maotai, the largest A-share market capitalization, saw its share price soar to a high of RMB 2,627 in mid-February, and fell to a low of RMB 1,900 in early March, a drop of more than 27% in the meantime.
Hong Kong’s new economy stocks have fallen hard
And new economy stocks that have been propping up the Hong Kong stock market in recent years, such as Alibaba, have been in constant disaster since its Ant Group called a halt to its Hong Kong listing plans last November, with shares going from HK$309 all the way down to $207.
Tencent is widely rumored to be next in line for investigation by the authorities, with its shares bottoming out at HK$613 a few days ago from a high of HK$775 in mid-February.
Bloomberg disclosed that Tencent might be asked by the Chinese Communist Party authorities to incorporate all its financial businesses into a financial holding company to receive bank-like control, just like Ant Group, and then Tencent’s market value evaporated more than $65 billion in two days on March 12 and 15.
Cell phone maker Xiaomi, which was blacklisted by the U.S. early this year on suspicion of being linked to a Communist Party of China military task force, saw its share price fall from HK$35.9 in early January to HK$20.65, while others such as Meituan dipped from HK$460 to HK$289, Jingdong from HK$422 to HK$318, and BYD from HK$278 to HK$163, all by not insignificant margins.
The newly risen Apple foundry A-share Lixun Precision, which was filed in the United States at the end of January this year to investigate whether the patent infringement, the share price fell from 63.88 yuan to 36.79 yuan, a 42% drop. The market was once rumored last year that Lixun would replace Foxconn as the leading Apple foundry.
Semiconductor stocks also suffered heavy losses
Xie Jinhe also singled out the semiconductor industry, with Ziguang’s share price falling to just around RMB19 at present. In 2015, Ziguang had a price of 139 yuan.
Shares of SMIC, which produces chip etching equipment under the title of “China’s ASML” (ASML), have plunged 66% from RMB 298 in July last year to RMB 99.89. Huitian Technology, the first mainland IC design company with a market capitalization exceeding RMB100 billion, has lost 70% of its share price from a high of RMB388 in early 2020 to RMB110 at present.
The much-talked-about SMIC has fallen 42% from its opening price of RMB95 when it re-listed in Shanghai in July last year to around RMB55 now.
The Chinese media recently reported that SMIC has increased its 14nm process yield, but its earnings report never independently listed the revenue share of 14nm, which market participants questioned the news.
According to Xie Jinhe, China’s Shenzhen, Shanghai and Hong Kong stock markets have recently fallen back into gear early and heavily, “If stock prices are a leading indicator, it seems to imply a deeper meaning that everything from Ali and Lixin to many semiconductor stocks have fallen into the short market early.” He wrote in a Facebook post.
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