Just one day after Chinese leader Xi Jinping solidified his absolute control over the country at a significant political conference, Hong Kong markets experienced their worst day since the global financial crisis of 2008.
Despite the publication of stronger-than-expected GDP numbers, foreign investors panicked over the outcome of the Communist Party’s leadership reshuffle and sold both Chinese stocks and the yuan.
They fear that Xi’s increasing control over Beijing will result in the continuance of its current policies and further damage the economy.
The benchmark Hang Seng (HSI) Index for Hong Kong fell 6.4% on Monday, the most since November 2008. The index hit its lowest closing point since April 2009.
According to reports, the Chinese yuan weakened sharply, hitting a fresh 14-year low against the US dollar on the onshore market. On the offshore market, where it can trade more freely, the currency tumbled 0.8%, hovering near its weakest level on record, even as the Chinese economy grew 3.9% in the third quarter from a year ago, according to the National Bureau of Statistics. Economists polled by Reuters had expected growth of 3.4%
The sharp sell-off came one day after the ruling Communist Party unveiled its new leadership for the next five years.
In addition to securing an unprecedented third term as party chief, Xi packed his new leadership team with staunch loyalists.
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