China's benchmark stock index, the CSI 300, has entered a bear market, having fallen by 20% from its June high, indicating that the long-term selling pressure in the Chinese stock market has deepened further.
According to LSEG data, the CSI 300 index, which tracks the 300 largest market capitalization stocks in the Shanghai and Shenzhen stock markets, has been declining for 10 consecutive weeks. As of this week, it has accumulated a decrease of 2.6%, highlighting the ongoing pressure on the Chinese stock market.
Pella Funds Chairman and Chief Investment Officer Jordan Cvetanovski stated that the Chinese stock market still faces structural challenges, especially at a time when this world's second-largest economy is striving to cope with the consequences of years of overcapacity and excessive investment.
Cvetanovski to CNBC said: "I believe that China is indeed making efforts to control the difficulties brought about by past overcapacity expansion and other issues." He also pointed out that even in industries with global competitiveness such as batteries, companies face challenges – however, he still believes that there are some selective opportunities in this field for China.
Chinese companies have been hit by declining profit growth, with fierce competition eroding profit margins, even prompting government intervention. In September, Chinese industrial enterprises recorded the weakest profit growth rate of the year so far.
The world's second-largest economy recorded its slowest growth rate in over three years in the second quarter, dragged down by years of sluggishness in the real estate industry and continuously weak consumer demand.
