The benchmark Shanghai Composite Index is 25% below where it started this year, making it the worst-performing major stock market in the world. The breakout of a trade war between the US and China has wiped out $2.4 trillion this year, while a deleveraging drive has squeezed margin debt to just one-third of its peak in 2015.
While foreign investors continued to pour money into onshore equities via the stock connects and state funds were said to have bought exchange-traded funds to rescue shares, they did little to arrest declines. There was no place to hide with even the safe-havens losing ground, as the weak Chinese economy hurt spending and weighed on consumer stocks, while a vaccine scandal and a gene-editing controversy sparked a selloff in the health-care sector.
Stock declines have shaved $2.4 trillion off China’s market value this year as of Thursday, the biggest on record since Bloomberg started compiling the data in 2002. The closest loss was during the global financial crisis 10 years ago, when the Shanghai gauge plunged 65%. China also ceded its place as the world’s second-biggest stock market to Japan earlier this year.
Investors haven’t been this disengaged with stock trading in years. Average daily turnover on both the Shanghai and Shenzhen exchanges fell to about 368 billion yuan (nearly $54 billion) this year, the lowest since 2014. Just 239 billion yuan of shares traded on Friday, about one-tenth of its peak in 2015.
None of the sectors were safe enough to shield investors from losses. All 10 industry groups on the CSI 300 index fell on the year, the broadest decline since 2011. That’s a stark reversal from last year, when all sector gauges rose.