Quotes of the largest Chinese companies fell to a 5-year low
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Today stock quotes of Chinese blue chips dropped to a five-year minimum. This happened a day after reduction Moody’s agency’s forecast for the sovereign rating of the PRC. The agency lowered the forecast due to increased structural risks in the Chinese economy, as well as a decline in economic growth in the medium term. The rating agency also noted the strengthening of fiscal policy in China and the increase in government debt.
The reaction of investors was not long in coming. The CSI300 index of the country’s 300 largest companies dropped to its lowest level since February 2019 at the opening of today’s trading session. Since the beginning of the year, the CSI300 Index has decreased by 12% due to economic problems in China, becoming one of the worst performing stock indices in Asia. “The CSI300 Index is suffering the most because foreigners are actively investing in its constituent companies,” Pan Sichong, research director at the investment company Nanjing RiskHunt, told Reuters. “However, given the consequences of Moody’s decision, this index may soon find the bottom and begin to recover.”
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