HK Stocks React to Xi

Xi and Politburo move markets in a downward direction

How did Hong Kong react to General Secretary Xi Jinping's extension of power for at least another five years and his seven-man Politburo lineup?

The Hang Seng Index plunged over 700 points to drop below 16,000 points, a 13-year low. The index fell 4.4 percent to 15,494. 24 at 11.01am local time, the lowest level since May 2009. There was a major sell off of tech stocks, with Alibaba Group falling 8.8 percent to HK$63.50, a record-low close, and Tencent Holdings slumped 7 percent to HK$216.80. Meituan slumped 9.5 percent to HK$128,10.

HSI plunged below 15,000 in 13 years

Developer stocks also dropped, with Longfor Group falling 9.4 percent to HK$17.30 and Country Garden lost 7.7 percent to HK$1.32.

In his report to the Congress, Xi called for "regulating the mechanism of wealth accumulation", signalling a tighter oversight of private capital following months of crackdown on tech companies, while also pushing his vision for "common prosperity" in a bid to close the wealth gap in the country.

China's economy grew only 3.9 percent in the third quarter when it had projected 5 percent, demonstrating a lack of consumer confidence in the retail sector, which only grew 2.5 percent in the third quarter.

Does Xi even care about economic numbers? This slide backwards is a rebuke to what Jiang Zemin/Zhu Rongji and Hu Jintao/Wen Jiabao did in the past 20 years.

Unless Xi has an economic miracle up his sleeve, stocks are going to sink further.

Xi's Loyal Lineup

The men who will be in charge of China were revealed today

A day after former president Hu Jintao unceremoniously left before the end of the National Congress of the Chinese Communist Party, Chinese leader Xi Jinping revealed his Politburo Standing Committee which left China experts' tongues wagging.

Looking at the lineup, it's not about competence or a diversity of opinion, but fierce loyalty to Xi that trumps all.

The biggest shocker is that Premier Li Keqiang will be replaced by Li Qiang, 63, who was the Party Secretary of Shanghai. 

Xi chose those most loyal to him in Politburo

He bungled the Covid-19 outbreak in Shanghai, which resulted in the city being locked down for more than two months and people complained of not having enough food to eat. 

Surprisingly Li was not sacked because of his close relationship with Xi, and his influence as Party Secretary of Shanghai.

The two go way back to 2004 when Li was Xi's chief secretary in Zhejiang province, and Xi promoted him to governor of the province when Xi became President in 2013.

It's quite concerning that Li will be in charge of the country's economy, but with zero-Covid still in force, perhaps he won't be expected to meet unrealistic targets.

Others in the lineup: Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang, and Li Xi.

Zhao is head of the Central Commission for Discipline Inspection, reporting on several officials for corruption over the years. When he was 42 years old, he was the youngest provincial governor when he was governor of Qinghai.

Shanghai's lockdown was chaotic and shocking

Wang has an academic background, and was the brains behind many Communist Party concepts, such as the Three Represents of Jiang Zemin, the Scientific Outlook on Development of Hu Jintao, and Xi Jinping Thought. It is believed the Belt and Road project was also Wang's idea.

Cai is currently Mayor of Beijing, and his success of hosting the Winter Olympics earlier this year in a closed loop earned him brownie points. But in 2017 in a bid to reduce the capital city's population, he kicked out many migrant workers who were living in the outskirts of the city.

Ding is a trained engineer and one of Xi's closest confidants. He has worked as Xi's secretary since 2007, and seven years later became head of the presidential office, similar to chief-of-staff.

Li is Party Secretary of Guangdong Province where he pushed for the development of the tech industry and economic reforms. 

Should we be surprised there are no women in this powerful policy-making body? For a country that claims "women hold up half the sky", it doesn't seem to trust or believe women are capable of doing the job...