With the end of the Chinese Communist Party (CCP)’s 20th National Congress and CCP General Secretary Xi Jinping starting a third term, Hong Kong stocks opened low and plunged on Monday, October 24, falling below the 16,000-point barrier, down nearly 7% during the day and continuing to hit a 13-year low.
Industry insiders believe that the 20th CCP Congress have not introduced any policies that suggest an end to Zero-Covid regulations or support the real estate sector. With the Xi’s faction in full power, insiders worried that the CCP will carry out a factional purge, and politics will take precedence over the economics in the future. The source also said that the ” wealth accumulation system” proposed by the 20th Congress for common prosperity may lead to the nationalization, by which private companies become controlled and owned by the government, and major adjustments to the taxation system in the future, that will be unfavorable to the capital market.
At the same time, the US may restrict another round of sales of AI applications, AI chips and servers to communist China. As a result, Hong Kong stocks plummeted on the first trading day after the 20th Congress. Investors need to remain cautious.