Feb 27, 2020 (China Knowledge) - After a long week Lunar New Year’s holidays, Shenzhen Stock Exchange’s ChiNext Index surged 30% in less than a month. Instead of continuing its previous upward trend, the A-share market has fallen sharply yesterday, down 4.66% to close at 2180.7. It is important to note that the semiconductor sector also declined dramatically 8% the same day.
Yesterday's plunge in ChiNext saw a net outflow of RMB 6.7 bln from foreign capital through Hong Kong Stock Connect, the fourth consecutive day of outflows. Since last Friday, net outflows through Hong Kong Stock Connect have reached RMB 20 bln.
Some fund managers said that the declines are normal, and the long-term upward trend for technology stocks stays unchanged; many fund managers also believe that such growth stocks are still mainline of investment; however, there are also brokerages said that China's stock markets will struggle to rise much further.
Affected by the epidemic outbreak, the global markets have also been volatile in recent days. For the second day in a row, the Dow Jones Index (DJI) plunged 3.56% and 3.15%, losing nearly 2,000 points. Because the correlation between A-shares and global markets is increasing, it is inevitable that most markets are affected to some extent.
Global market sentiments should gradually pick up with the strong positive signs on the containment of the virus spread across China. The resumption of production and business activities are progressing in an orderly manner and a plethora of supportive policies and government aids being implemented.
The current short-term impact may be seen as a consolidation stage and should provide a sound investment opportunity for investors entering China’s stock market.
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