Alibaba sinks to lowest in 6 years and Nio plummets as US-listed Chinese shares sell off on growth worries after President Xi locks in 3rd term
- Alibaba shares fell to a six-year low Monday as part of a selloff in US-listed Chinese stocks.
- Stocks tanked after President Xi Jinping secured his third term and packed his core team with loyalists.
Alibaba, Nio and other US-listed shares of Chinese companies tumbled Monday on concerns about China's growth prospects as President Xi Jinping secured his third term overseeing the world's second-largest economy.
The ruling Communist Party ended its twice-a-decade congress with Xi on Sunday putting loyalists into his core team.
"A faction within the Chinese Communist Party has taken control of the party, and therefore the state. There are no centers of power that can challenge him. The direction China is moving is more nationalistic, less interested in market reforms, and more strident in its desire to challenge the international order," Marc Chandler, managing director at Bannockburn Global Forex, wrote in a note Monday.
Shares of Chinese tech companies ran lower as that sector has been subjected to a crackdown by Beijing regulators, who have cited concerns about anti-competitive behavior and security issues.
E-commerce company Alibaba fell as much as 13% to $62.60 on the New York Stock Exchange, hitting lows not seen since 2016 before paring the loss to 11.5%. Electric vehicle maker Nio lost as much as 11%, falling to $9.75 before trimming the decline to 9.3%.
On the Nasdaq, search engine heavyweight Baidu sank 12%, e-commerce company JD.com lost 14%, and e-commerce tech platform Pinduoduo dropped 15%. EV manufacturer XPeng fell nearly 19% on the NYSE.
Hong Kong's Hang Seng Index fell to a 14-year low as the equity gauge lost more than 7% during the session.
"Xi's consolidation of power at the national party congress after his predecessor Hu Jintao was unceremoniously escorted out has investors running for the exits," Bespoke Investment Group wrote Monday.
It noted that the KraneShares CSI China Internet ETF fell to all-time lows in premarket trade and has lost more than 80% from its all-time high in February 2021 in a larger drawdown than the Nasdaq had from the burst of the dot-com bubble.
Meanwhile, Chinese data released Monday showed gross domestic product rose 3.9% in the third quarter of 2022 from a year ago. The rate was above the 3.4% pace forecast in a Reuters poll but below the government's target of 5.5%.
China's economy is growing at its slowest pace in roughly three decades in part as the country deals with the COVID-19 pandemic with a zero-tolerance policy that has put millions of residents under multiple lockdowns.