Economics
China’s Plunging Markets Flash Fresh Warning Signs on Economy
- Stocks erase June gains; yuan weakest in a month versus dollar
- Covid Zero, property defaults continue to trouble investors
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Chinese financial markets are flashing warning signs that another round of Covid shutdowns could create more turmoil for the economy.
The Hang Seng China Enterprises Index of stocks has lost almost 9% since June 28 as a new Covid subvariant threatens to paralyze factories, dampen consumer spending and hurt construction activity. China’s yuan, meanwhile, is renewing losses against the dollar, with the onshore rate the weakest in a month. Credit stress is also intensifying as China Evergrande Group teeters near its first onshore default, after another developer’s $1 billion delinquency revived broader contagion fears. And iron ore prices have fallen to a seven-month low.