World’s Biggest Stock Market Loser Just Keeps Falling

(Bloomberg) -- An index tracking Chinese companies listed in Hong Kong, which has been this year’s worst-performing major stock gauge globally, is falling further and further behind its peers. 

The Hang Seng China Enterprises Index, whose most heavily weighted stocks include Tencent Holdings Ltd. and Alibaba Group Holding Ltd., tumbled another 2.4% to a five-year low on Monday. The gauge also trailed behind all counterparts over the past month, three months, six months, year-to date and over 12 months. 

Investor concerns earlier this year about sky-high valuations coupled with Beijing’s regulatory crackdown sent the gauge tumbling by nearly 21% so far this year. Traders bold enough to take advantage of any bargain hunting opportunities have repeatedly been battered. 

The extent of the losses show just how far Beijing has gone to tighten its grip over some of the most powerful private enterprises in the country. Since its February peak, Hong Kong’s Hang Seng Tech Index -- which has a lot of overlap with the HSCEI -- has seen its members lose $1.4 trillion in market value. That index traded near new lows on Monday. Even the Hang Seng Index fell into a bear market in August. 

And it’s not just tech. From Macau casinos to after-school tutoring to property shares, nearly every corner of China’s stock market has felt reverberations of the months-long crackdown. Regulatory curbs also unseated Hong Kong as the No. 2 market in Asia behind Japan in late July and briefly removed Tencent from the list of the world’s 10 largest companies by market value. 

Traders are bracing for more clampdowns when market participants in mainland China return after their Golden Week holiday that will run through Thursday. Many fear things could still get worse before they get better.

©2021 Bloomberg L.P.