Hong Kong stocks diminish as Xi begins 3rd term with added powers, economic challenges
Hong Kong’s benchmark index plunged to a more than 13-year low on Monday as China’s new leadership spooked stock investors.
The Hang Seng ended the day down 6.36 percent from Friday’s close. Investors were worried that Beijing may further clamp down on Chinese high-tech firms.
The benchmark index in Shanghai dropped by 2 percent.
There were concerns that Chinese officials will seek to reduce inequality at the expense of economic growth. Investors also feared that the conflict with the US could worsen.
The impact also reached Tokyo although the Nikkei Average eked out gains of 0.3 percent on easing concerns about a US economic slowdown.
The upside was limited as stocks of department stores and railway companies were hit by expectations of weak inbound demand as China sticks to its zero-COVID policy.
Chinese President Xi Jinping has cemented his grip on power, breaking a long-held political taboo. Xi is entering his third term as China’s leader and he is vowing to tackle the country’s growing economic challenges.
Xi said, “We will faithfully fulfill our duties without forgetting our mission and responsibility. And we will never betray the trust of the party and the people.”
He picked four new members for the country’s top decision-making body, Politburo Standing Committee. All of them are former subordinates.
They include Shanghai’s top Communist Party official, Li Qiang, who oversaw that city’s tough COVID lockdown. Li is likely to serve as China’s new premier.
The man he’s expected to replace, Li Keqiang, was among those removed from the top leadership.
Vice-Premier Hu Chunhua was considered a potential future leader of China. But he lost his seat as a Politburo member. Hu is close to both Li, and the country’s former President Hu Jintao.
On the streets of Beijing, people say they have high hopes for Xi and his new team.
Xi’s new team faces a range of challenges from pandemic recovery, to a deteriorating relationship with the US.
China is also dealing with demographic issues, brought on by an aging population and low birthrates.
