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Chinese stocks slid the most in five months on Thursday, a day after President Xi Jinping projected his nation’s global ambition with a landmark military parade in Beijing.
The blue-chip CSI 300 benchmark fell 2.1 per cent, while Hong Kong’s Hang Seng index dropped 1 per cent. China’s tech-focused Star 50 index shed 6.2 per cent.
The CSI 300 surged more than 10 per cent in August, fuelled by a rally in technology companies such as chip designer Cambricon. Prior to Thursday’s fall, the index was up more than 14 per cent for the year, reaching its highest level since 2022.
The sell-off is the largest since early April, when US President Donald Trump’s tariff threats on China caused the CSI 300 to drop more than 7 per cent in one day.
Market participants saw an opportunity to take profits from the tech rally, said Zhao Jian, head of a research institute at Hong Kong-based asset manager Atlantis Investment.
Banking stocks rose as the so-called national team — an array of institutions that can work together to support the market — was said to be buying financial shares.
A report on Bloomberg that China’s financial regulators were considering cooling measures for the stock market also sent shares lower, said Wee Khoon Chong, a senior strategist at BNY.
Margin trading — borrowing to purchase stocks — rose to an all-time high of Rmb2.29tn ($321bn) on Monday, exceeding a record set in 2015, when a sharp rally in China’s stock market led to a crash.
Strategists said Thursday’s drop was unlikely to mark the beginning of a larger sell-off.
“I don’t think it’s a turning point,” said Chong. “It’s not a repeat of 2015.”
“We still expect a slow bull market going forward,” said Scarlett Liu, Asia-Pacific equity and derivatives strategist at BNP Paribas. “It’s reasonable to see a near-term consolidation due to profit-taking in the tech names.”
China’s securities regulator informally cautioned brokerages last week against using the military parade or the recent rally to attract new clients, as mainland stocks typically rise during major national events.
However, a person close to a mainland stock exchange said there was “no major policy shift” towards slowing the market’s bull run in the long term.
