Investing

MSCI China Index Continues Losing Streak, Down 8% This Year

Tim Fries

Published: September 18, 2023 10:22 pm

Equities in China continued on their sharp downtrend as the markets opened on Monday amid continuing troubles in the country’s property sector. These challenges have taken the MSCI China Index’s losses to 8% in 2023 after losing more than 43% over the past two years.

MSCI China Eyeing Third Straight Year of Losses

Chinese stocks opened yet another week in the red territory on Monday as persisting challenges in the country’s property market overshadowed signs of recovery in other areas of the economy.

The persisting losses signal that the bearishness among investors has likely hit extreme levels, with the MSCI China Index down around 8% since the start of 2023. MSCI China, a stock market index that measures the performance of publicly traded companies listed in the country, is heading for its third consecutive year of losses.

The index data shows that China’s biggest equities have lost more than 21.7% and 21.9% in 2021 and 2022, respectively. With a likely negative performance in 2023, MSCI China is staring at the worst losing streak in more than 20 years.

Although recent data pointed to signs of recovery in the world’s second-biggest economy, glaring issues in China’s property sector remain the biggest obstacle. This, along with the country’s economic downturn during the coronavirus pandemic and its continuing tensions with the West, has led to “avoid China” as one of the most potent convictions among global fund managers, Bank of America’s recent survey revealed.

“Though the economic data showed some recovery, the crux of the issue for the market at present is property, and despite the raft of measures to prop up sales, the recovery in prices and volumes seems limited to large cities.”

– Yang Zhiyong, fund manager at Beijing Gemchart Asset Management.

China’s Property Market Woes

Once considered the critical catalyst of its economic growth, China’s property market can’t catch a break. The sector’s challenges emerged several years ago as cheap debt fueled a property bubble now bursting as demand wanes.

Country Garden, one of the biggest property developers in the nation, barely avoided default on its debt last week. In August, the company expected to post a $7.6 billion loss for the first half of 2023.

Property woes and headwinds in China’s shadow lending sector pushed the country’s stock market to new lows this year. The securities regulator unveiled a set of measures aimed at reviving Chinese equities last month, including the first stamp duty cut since 2008. However, these steps are currently doing little to bring back confidence among investors.

This article originally appeared on The Tokenist