The China stock market and its technology stocks in particular are at multi-year lows. By comparison, world stock markets, led by the U.S. exchanges, are the winners. Why did China’s stock markets fall to a four-year low last week?
China’s CSI 300 Index lost nearly 5% in 2024. Down by one-fifth in the last year, it is at levels not seen since 2019, before the Covid lockdown in the country.
Chinese electric vehicle stocks are faring as poorly as U.S. EV penny stocks. While Lucid Motors (LCID) and Fisker (FSR) fall to fresh new lows daily, Nio, Xpeng (XPEV), and Li Auto (LI) are in a severe downtrend. BYD may have overtaken Tesla (TSLA) in total sales in 2023 but the stock is in a downtrend.
Investment managers seeking Asian market exposure are avoiding China.
Domestic competition is intensifying. PDD, which relocated its headquarters and changed its name from Pinduoduo, is enjoying strong success with its Temu app. It smartly pivoted into inexpensive goods. The Chinese consumer lost most of their savings from falling real estate markets. As a result, they are unwilling to buy from Alibaba (BABA) and JD.
Even Baidu (BIDU) cannot get a break from the negative headlines. Rumors that the Chinese military used AI sent BIDU stock down by 12.5% last week.