Chinese shares listed in Hong Kong crater to all-time lows as macro forces batter global stock markets

A man covers his face as he reads information displayed on an electronic screen at a brokerage house in Shanghai May 17, 2010.

REUTERS

• Chinese shares listed in Hong Kong cratered to an all-time low this week. 
• The Hang Seng Index plunged 14% on Thursday to its cheapest value on record.
• China stocks could rebound if strict COVID-19 lockdown policies are lifted, but that is unlikely before 2023.

Chinese shares listed in Hong Kong cratered to an all-time low this week as macro forces continue to slam global equities markets.

As of Friday, the Hang Seng Index plunged 14% during September to their cheapest value on record. It also means the index is the worst-performing global stock index this month, Bloomberg originally reported.

The fall largely stems from China's slow emergence from its COVID-19 lockdowns, and the fact that it's still sorting out "deep issues" in its housing and labor markets, according to a note from Bank of America. 

That's put China's economy in a chokehold, causing manufacturing activity to slow while foreign demand for Chinese goods also declines. The nation's index measure for new exports fell to 47, a four-month low for Chinese manufacturers. On top of that, the International Monetary Fund has slashed its growth estimates for China twice this year, warning of a possible recession into 2023.

Some are hoping for a reversal at China's Communist Party Congress in October, where leaders will discuss lifting the nation's zero-COVID policy. That could rev up China's economy, but some analysts remain skeptical if that's in the cards. Goldman Sachs predicted lockdown restrictions to persist until mid-2023, with a low chance of a stock revival in October, Bloomberg reported.

High inflation and recession fears are hammering equities around the world. The S&P 500 closed at a new low for the year on Thursday, ending the day at 3,640. European stocks have also been burdened by soaring energy prices and sky-high inflation this year, which has the potential to throw Europe into a severe recession. 

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