The negative news keeps coming for China’s equity market. The Shanghai Composite Index on Monday slipped below its lowest closing level of 2016, back when the country was managing the fallout of a stock market crash and yuan devaluation.
The Shanghai gauge slid as much as 0.6% to 2,653.11 in afternoon trade. It pared some of the decline shortly afterward and was at 2,663.54 as of 1.56pm local time. The 2016 closing low was 2,655.66.
Around $1.5-trillion has been wiped from China’s equity benchmark since it hit a more than two-year high in January. Investors have been spooked by factors ranging from Beijing’s deleveraging campaign and its impact on liquidity, to a heated trade dispute with the US, a weakening yuan and signs of a slowing economy. The Shanghai measure is among the world’s worst performers this year.
“Authorities certainly don’t want to see stocks slide further, valuations at current levels appear attractive, though it would be hard to revive sentiment on the market,” said Shen Zhengyang, Shanghai-based strategist with Northeast Securities. “The trade negotiations that are dragging on will continue to cloud the market outlook.”
Other Chinese equity gauges have also fared poorly. The CSI 300 Index is down 26% from its January high and the ChiNext gauge of small caps and technology stocks has also fallen 26% since the end of March.
“China’s economic policies and deleveraging over the past few years made small and private firms the biggest victims, so unless that policy orientation is changed to reinvigorate the economy, I don’t see any turnaround in stocks,” said Sun Jianbo, president of China Vision Capital Management in Beijing.