This is a bad week for the Chinese stock market. During the last seven days, the most resilient tech stocks fell to never before seen low levels. To make matters worse, the benchmark index of Hong Kong also crashed down and pushed back to the 10-month lows. The recent exodus of cryptocurrency mining has initiated an environment of fear and panic among investors in the market.
On the whole, the China Stock markets lost $560 billion in mainland and Hong Kong exchanges. The investors seem to be abandoning the most favorable equity positions as they are not sure that when the government can start targeting a new industry. The stock markets of China are experiencing the worst setback since last year when the Pandemic hit the economy with brute force.
Investors in China are Dealing with Market Uncertainty
The investors in China are unsure about when the government can fold an entire industry at its discretion. As a result, the stock markets of Shanghai are declining as many investors are opting out of the high-risk commercial debts. Furthermore, the same effect is visible on the Chinese Yuan that has gone back to depreciated value from 2 weeks back.
The biggest damage is sustained by the Tech sector as it is most susceptible to the regulatory risk from the state. Alibaba is currently dealing with the lowest recorded price-to-earnings ratio since the 2014 IPO in New York. Managing Director of GFM management from Hong Kong claims that Alibaba could rise many times higher than 20x earnings if the market was more positive.
Coinbase is a cryptocurrency exchange platform based in the USA. CEO of the enterprise Brian Armstrong recently announced that the company is planning to invest $500 million into crypto as an investment portfolio. He took to Twitter to reveal that the crypto giant will invest 10% of its quarterly profits into digital asset holdings.
At present, the total market cap for the entire crypto market is valued at $2.19 trillion. Veteran crypto market analyst Michael Van De Poppe claims that the crypto market is ready to set on a resistance level of $2.2 trillion in the near term. Many agree with this prediction as tokens like Cardano, Solana, and Polygon are doing very well. Meanwhile, Bitcoin seems to adhere to the price peak route.