Hong Kong Shares Plummet To A Near 18 Month Low

Hong Kong shares have plummeted once again, this time reaching the lowest levels in nearly 18 month. China’s stock market bounced back from losses early on. China’s main index encountered losses after a rout in the United States shifted to Asia.

The Hong Kong Hang Seng Index ended the day down 1.01%, reaching the 24,994.46 level. This loss brought the Hang Seng to a three day decline, down 4.5%. The Hang Sang index was one of the top performers in the world.. quite the contrast to this year. 

China Stock Market Analysis

Hang Seng Index is down by around 16.5% for this year.

Shanghai Composite Index was trailing at the start of the trading day, fighting to overcome losses stemming from the US markets. The shanghai Index recovered gaining a tiny 0.02%, closing at 2,603.8. 

The Shanghai Composite’s turnaround is making some analysts speculate wether the gains were state backed. This in turn would mean that index would be backed by state funding to prevent any further losses. Considering that the Shanghai Composite is the worst performing market this entire year, it would be surprising to think that the state would intervene.

If you state did in fact back the Shanghai Composite it would not be the first time. The state also attempted to prop up the markets by buying shares in 2015 after the market crisis. The 2015 crisis wiped out $5 trillion in market cap. Property development and brokerages  are said to be the cause of the turnaround as state-backed funds were dubbed.

Some analysts are attributing the market decline to challenges in the commodity industry, stemming from the Chinese economy. Since China is a major metal and crude oil importer, any issues faced within China cause the rest of the world to feel an impact.

It is clear to see that performance of the U.S stock market does not coincide with global markets. This is strong evidence backing the idea of the China stock markets impacting markets across the world.

Metal is seen as China’s most accurate economic indicator, with recent declines being attributed to struggles in the Chinese economy. The trade war with the Unites States has also put the Chinese economy under scrutiny.

China’s domestic product increased 6.5% from the previous year in Q3. This represents the slowest pace of economic growth for China.

Investing In Shanghai Composite Index

Investors should wait until the end of 2018 before making solid predictions relating to Chinese stocks, especially the Shanghai Composite Index.

Housing in China accounts for 12% of the GDP and is a major part of the economy. housing prices in China are up 43% higher than 2008, only dropping slightly in 2015. With mortgage debt/consumer loans hiking.

The trade war has proven to be more of an issue for China rather in the United States, but the longer the trade war continues for, the more impact both economies will feel. With tariffs increasing on both sides, import and exporting between the two countries is proving to put strain on global economies

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