The huge plunge in share prices in the US has already led to sell-offs around the world, with all the major boards in Hong Kong and the Chinese mainland posting the biggest one-day drops in more than a year on Tuesday. But mainland markets should be relatively shielded from further influence from Wall Street compared to those in Hong Kong and elsewhere in Asia, according to Caixin.
“The sudden plunge of U.S. stocks will inevitably cause a spill-over effect on global markets, as investors worldwide are looking for safer assets,” Ethan Wang, head of investment strategy at Standard Chartered China, told Caixin.
“The Hong Kong stock market is likely to be under some pressure in the short term as the Hong Kong market has risen too high too fast since the beginning of 2018 and as global investors’ risk appetites expanded significantly amid the sharp decline in the U.S. stock market,” analysts at Bank of China wrote in a note Tuesday.
The boards in Shanghai and Shenzhen should be more resistant to any global correction due to their relative separation from the global financial system, said Standard Chartered’s Wang. But he added that offshore investors may sell off mainland shares, which could put downward pressure on blue-chip stocks that such investors tend to favor.