CSI 300 index down 3%, ChiNext down 5%
There is quite the meltdown going on in Chinese equities to start the week as investors are fleeing given that authorities are starting to wind down stimulus efforts.
The PBOC has tightened liquidity quite substantially since the turn of the year and local authorities have warned of potential imbalances and "bubbles" in financial markets earlier this month - as seen here.
Since peaking on 18 February, the CSI 300 index is down by nearly 16% after adding in the 3% drop today. Meanwhile, the tech-heavy ChiNext index is leading declines with a drop of 5% today and down by roughly 25% from its peak this year.
The selloff is also sparking a retreat in assets closely-linked to the China market, with the aussie notably slumping alongside a drop in the yuan so far today.
I would expect Chinese authorities to calm any fears of an extended bear market but given how they are somewhat fine with the recent plunge, expect them to feel comfortable with a more two-way market in trading this year.
As such, that might make assets elsewhere (where stimulus withdrawal isn't an issue yet) like the US arguably somewhat more attractive.
