Chinese stocks have officially entered a bear market defined as a decline of 20% or more from recent highs.
Chinese equities declined for a fifth consecutive day last Friday (Jan. 10), pushing a closely watched benchmark index into an official bear market.
The MSCI China Index (MCHI) fell 1.5% on Jan. 10, taking its decline since last October to 20%. The CSI 300 Index of onshore Chinese shares was down 1.3% and has lost more than 5% since the start of the year.
Stocks around the world have begun 2025 on a downturn. But stocks in China have been particularly hard hit as investors brace for higher U.S. tariffs on Chinese imports under president-elect Donald Trump.
Trade tensions between China and the U.S. have worsened after America blacklisted Chinese technology firm Tencent Holdings (TCEHY) for alleged links to the country’s military.
Several high-flying Chinese stocks have fallen sharply over the past month, including technology firm Alibaba (BABA) and electric vehicle maker Nio (NIO), which are each down more than 10%.
Additionally, the outgoing administration of U.S. President Joe Biden is undertaking another round of curbs on the export of artificial intelligence (A.I.) microchips to China.
The situation has contributed to declines in Chinese equities as fears of an all-out trade war with the U.S. escalate.
At the same time, China’s economy remains sluggish and mired in a prolonged housing crisis.
A rally in Chinese stocks last summer fizzled as investor hopes for more fiscal stimulus from the government in Beijing failed to materialize.
While China’s government has continued to rollout stimulus measures, they have been short of market expectations.
