China’s Mainland CSI 300 Index Apparently Feeling Blue, and It’s for Long

China’s mainland CSI 300 Index fell 0.47% today, on Wednesday, January 10, after dropping 1.3% on Monday to close at its lowest level since February 2019. The index has declined in every session this year and lost more than 4%, making it one of the world's worst-performing major stock indexes. The Hang Seng China Enterprises Index fell more than 2% and closed at its lowest level since November 2022, with technology stocks leading the way.

The CSI 300 Index ended the year with an unprecedented third consecutive annual loss in 2023 after foreign buying through trade links with Hong Kong fell to its lowest level ever.

Investors betting on a rebound in Chinese stocks in 2024 are put to the test as the market deepens its slump in the first week of trading in the new year. More and more persistent concerns about the country's economic recovery, as well as monetary policy’s uncertainty, have sent the continental benchmark stock index plunging to its lowest level in nearly 5 years.

Foreign investors on Monday began selling the equivalent of 600 million dollars worth of shares again as negative news seems to keep coming. Manufacturing data surprised with declines earlier this year, while trade tensions with Europe intensified and the bankruptcy of shadow bank Zhongzhi Enterprise Group underscored looming financial risks. Monday's announcement that the securities regulator lifted a ban on net sales for local mutual funds further undermined too optimistic, initially, sentiment.

While security prices have become quite low, investors may not necessarily see a similar upward momentum to bring capital flows back immediately.