FirstFT: Chinese shares fall to pre-pandemic low

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Good morning. China’s stock market fell to the lowest level since before the Covid-19 pandemic, as slowing economic growth, a liquidity crisis in the property sector and geopolitical tensions continue to weigh on shares.

The CSI 300 index of large and liquid Shanghai- and Shenzhen-listed stocks fell as much as 1.3 per cent on Monday to about 3,463, marking the equity benchmark’s lowest level since 2019. The gauge has fallen about 15 per cent so far this year, in dollar terms.

Slowing growth and high-profile defaults on dollar debt by Chinese developers have prompted investors to dump China stocks. Meanwhile a string of support measures top officials launched in July has failed to halt the sell-off. Here’s the latest on Chinese stocks — and how worsening US-China relations are unsettling global funds.

Here’s what else I’m keeping tabs on today:

  • Economic data: The S&P Global/Cips flash October purchasing managers’ index for manufacturing and services is due for Canada, EU, France, Germany, Italy, Japan, UK and the US.

  • Reports: The IEA publishes its World Energy Outlook.

  • Companies: Earnings season continues with Alphabet, Hermès, Barclays, Microsoft and Shimano among those reporting.

As the FT launches a newsletter on central banking, join Chris Giles and his international colleagues on Oct 25 8-9pm HKT for a subscriber-exclusive webinar to unpick lessons from central banks’ battle against inflation. Register for your ticket now and send in your questions for the panel.

Five more top stories

1. Hamas has freed two more of the dozens of hostages its militants captured during their assault on Israel earlier this month. The two hostages, Nurit Cooper and Yocheved Lifshitz, were named by the Israeli prime minister Benjamin Netanyahu’s office. The two women were seized from the kibbutz of Nir Oz by Hamas militants who over-ran towns across southern Israel on October 7. Read the full story.

  • Declaration of unity: Israel’s prime minister, defence minister and army chief insisted there was “unity in purpose” between them as signs grew of discord over the course of the war with Hamas.

  • ‘There is no work’: The war with Hamas has hit Israel’s economy, with economists forecasting a sharp contraction and big government deficits.

  • ‘Humanitarian pause’: The EU’s top diplomat called for a pause in hostilities between Israel and Hamas in order to allow aid deliveries into the Gaza Strip and hostages held there to be released.

2. Chevron has agreed to buy US oil and gas producer Hess in a $53bn all-stock deal, doubling down on its bet that demand for fossil fuels will remain robust for decades to come. The deal delivers Chevron a foothold in Guyana, home to the biggest oil discovery of the past decade, and comes as a rush of merger and acquisition activity begins to sweep through the US energy sector.

  • Interview: Chevron’s chief executive Mike Wirth says he will defy critics to make a “real world” case for fossil fuels. “We are not selling a product that is evil”, he told the FT.

3. China and the Philippines traded blame after two ship collisions in the South China Sea on Sunday. According to drone footage released by the Philippine coastguard, a Chinese coastguard vessel cut in front of the bow of a small wooden ship, causing it to hit its side. A Chinese maritime militia boat later bumped a Philippine coastguard vessel, Manila said. The two confrontations marked a further escalation in the territorial dispute between the countries.

4. WPP-owned media agency GroupM has sacked a senior Shanghai-based executive after Chinese police detained the high-ranking employee on suspicion of bribery last week. The dismissal follows an announcement by Chinese law enforcement that it had “cracked” a commercial bribery case involving an advertising company. Last Friday, the FT reported police had raided GroupM’s Shanghai offices. Read the full story.

5. Toyota says it is close to being able to manufacture next-generation solid-state batteries at the same rate as existing batteries for electric vehicles, marking a milestone in the global race to commercialise the technology. Here’s why solid-state batteries could be a “game-changer”.

Deep dive

© AFP via Getty Images

China’s biggest private sector developer appears to be heading for default after failing to make a payment on an offshore bond. Country Garden was long thought more stable than many of its peers, but its problems now show the turmoil in the sector at large. With thousands of unfinished homes across China and a swath of debt restructurings, here’s how the property crisis has unfolded.

We’re also reading . . . 

Chart of the day

The sharp increase in the cost of rice can be traced to a crackdown by India, the world’s largest rice exporter, in response to fears of a production shortfall and rising domestic prices. Analysts warn that if India maintains its current export restrictions, and other producers follow, the world is on track for a repeat of the 2008 rice crisis.

Line chart of Prices of white rice ($ per tonne) showing Benchmark rice prices have risen in major producing countries since India's export ban

Take a break from the news

From deep morning meditation practice to catching an evening train to Lake Como, spend a perfect Saturday in Milan with La DoubleJ founder JJ Martin.

JJ Martin with her dog, Pepper
JJ Martin with her dog, Pepper © Martina Giammaria

Additional contributions from Grace Ramos and Gordon Smith

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