CSI 300 enters bear territory after ten-week slide
The CSI 300 index has entered bear market territory, falling 20 percent from its June peak. The benchmark, which tracks 300 of the largest stocks listed in Shanghai and Shenzhen, has declined for 10 consecutive weeks. Data from LSEG showed the index is down 2.6 percent so far this week, indicating sustained pressure on Chinese equities.
The CSI 300 index has entered bear market territory, falling 20 percent from its June peak. The benchmark, which tracks 300 of the largest stocks listed in Shanghai and Shenzhen, has declined for 10 consecutive weeks. Data from LSEG showed the index is down 2.6 percent so far this week, indicating sustained pressure on Chinese equities.
Jordan Cvetanovski, chairman and CIO at Pella Funds, stated that the market faces structural challenges. He cited the fallout from years of excess capacity and overinvestment in the world's second-largest economy. Cvetanovski told CNBC that China is struggling to rein in problems from the overbuild of capacity. He noted that even globally competitive industries, such as batteries, face challenges, though he still sees select opportunities in that sector.
Chinese firms are experiencing declining profit growth due to intense competition that has eroded margins. This pressure has invited government intervention. In September, the country posted its weakest growth in industrial profits for the year. The broader economy posted its slowest growth in over three years in the second quarter, a result attributed to a multiyear slowdown in the property sector and extended weakness in consumer demand.