This is the most significant market sell-off since the dislocation during the Global Financial Crisis


This is the most significant market sell-off since the dislocation during the Global Financial Crisis

During that period, the HSI plunged 53% from peak-to-trough, Goldman strategists noted.

“This is the most significant market sell-off since the dislocation during the Global Financial Crisis, also putting the drawdown into the Systemic category per our classification,” the firm’s China equity strategists Kinger Lau and Si Fu told CNBC in an email.

The team added that it’s “impossible to call the market bottom” for the index, based on its trading patterns, which has shown major volatility in the past two years.

Next key levels

Analysts at Weiss Multi-Strategy Advisers said, “November may, in hindsight, be viewed as a key turning point for Chinese equities,” noting the Hang Seng China Enterprise index and the property sector saw significant gains.

“Property stocks were boosted by relaxed collateral and equity issuance standards, and tech stocks have been strong on earnings and reopening hopes,” the analysts said in a report.

After its November gains, the Hang Seng index hovered around 18,600 – a level of resistance according to market watchers.

“With the 18,600 level of resistance being overcome for the Hang Seng Index, that could seem to place the key psychological 20,000 level on watch,” IG market strategist Yeap Jun Rong said in a Thursday note.

He added the latest messaging from the Chinese government, including health officials encouraging elderly vaccination and broader signs of shifting away from its zero-Covid policies, has lifted the region’s stock market.

“Recent events have been supportive of the worst-is-over stance for Chinese markets,” he said, adding that the events have led to a “much-needed calm” to Chinese equities that continue to push higher on reopening hopes.

The HSI last fell below the 20,000 level in August, and analysts expect to see a continued rebound in the equity market on further signs that the nation will shift away from zero-Covid.