(Bloomberg) — Chinese stocks in Hong Kong slumped toward their lowest level in almost two decades, as an absence of fresh economic stimulus and market support measures deepened investor pessimism.
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The Hang Seng China Enterprises Index fell as much as 2.6% on Monday, edging closer to a level unseen since 2005 and making it one of Asia’s worst-performing key indexes. Chinese tech behemoths including Meituan and Tencent Holdings Ltd. were among the biggest drags.
The continued selloff in Chinese shares is in stark contrast to a more optimistic Wall Street, where the S&P 500 Index climbed to a record on Friday for the first time in two years. It also came after China’s commercial lenders kept their benchmark lending rates unchanged, a move that follows the central bank’s recent decision to maintain borrowing costs but may disappoint investors hoping for more aggressive stimulus.
The latest declines may be attributable to “a lack of catalysts in the near term and outflows to more attractive alternatives in the region,” said Marvin Chen, a Bloomberg Intelligence analyst. “Global markets have been surging on the chip sector, and this is an area where China and the rest of the world may run on separate tracks due to geopolitical tensions.”
The mood is similarly fragile in the mainland Chinese market, where the benchmark CSI 300 Index dropped as much as 0.9% Monday, poised for a second straight session of losses.
The deepening rout is adding pressure on a massive amount of so-called snowball derivatives, which are structured products that promise bond-like coupons as long as the underlying assets trade within a certain range. The CSI Smallcap 500 Index, a pricing reference for some of these products, slid as much as 3% Monday to within 1% of an earlier estimated threshold that may trigger widespread losses on the snowballs.
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The gauge of Chinese stocks listed in Hong Kong has lost about 13% so far this year, while the S&P 500 has gained 1.5%. CSI 300 has shed 5.1%.
A confluence of factors have driven the swoon in Chinese…
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