Chinese stocks in the US erased all their gains for the year as the rally driven by China’s fast reopening hit a wall of sluggish earnings and a lack of policy incentives, while fresh turmoil at Credit Suisse Group AG spurred a selloff in risk assets.
(Bloomberg) — Chinese stocks in the US erased all their gains for the year as the rally driven by China’s fast reopening hit a wall of sluggish earnings and a lack of policy incentives, while fresh turmoil at Credit Suisse Group AG spurred a selloff in risk assets.
The Nasdaq Golden Dragon China Index tumbled as much as 4.1% on Wednesday, dropping to the lowest level since December. The gauge is down about 20% from this year’s high on Jan. 26. Tech-names including Alibaba Group Holding Ltd., JD.com Inc. and Baidu Inc. were among the biggest losers mid-week.
The latest troubles at the Swiss bank following the collapse of some American regional lenders sparked a rush for havens on Wednesday. Chinese stocks in the US were already losing momentum in recent weeks amid mixed results from a slew of earnings and failure last week of the National People’s Congress to reveal major policy incentives.
Read: Chinese Stock Bulls Dealt a Blow as Congress Underwhelms
Investors have been recalibrating their bets on China’s reopening as Beijing set this year’s economic growth target at 5% this year, below economists’ estimates, in a signal that authorities may avoid large stimulus programs.
After rapid gains made Chinese stocks one of the most crowded trades for hedge funds earlier this year, attention is turning back to lingering issues such as tensions between Beijing and Washington as well as the state’s control over private enterprise.
Despite recent losses that’s left Golden Dragon index down around 1% year to date, it’s still up almost 50% from its its multi-year low reached in October.
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