Money is fleeing from the Chinese stock exchange. It hasn't been this bad for five years

China is in crisis, causing investors to worry about both the economy and the political situation, leading to a decline in valuations for Chinese companies. Stock exchange prices have fallen to levels not seen since 2019.

Every day brings concerning news from the world's second-largest economy. President Xi Jinping, who had previously avoided discussing the issue, has now started addressing it more prominently. Additionally, it has been revealed that problems in the local real estate market have spread to the financial sector, with the Chinese lender Zhongzhi declaring bankruptcy.

China in crisis

Bloomberg began the new week with information that stock valuations on the Chinese stock exchange fell to the lowest level in five years. The report notes the disastrous start to 2024 for the CSI 300 index.

"Long-term concerns about the country's economic recovery and political uncertainty have pushed stock indexes to their lowest levels in almost five years. Foreign investors again started selling shares worth $600 million on Monday.

The CSI 300 index ended Monday's session down 1.3%, closing at its lowest level since February 2019. The index has fallen in every session this year, losing more than 4% and becoming one of the worst-performing major stock indices in the world.

As is customary in such situations, there are voices supporting Chinese shares, claiming that valuations are excessively low and indicating the potential for huge profits if positive stimuli appear. Bloomberg quotes, for example, UBS Securities analysts, who describe themselves as "relative optimists" in this case, believing that the Chinese stock market may be hitting rock bottom from which it will soon rebound.