Chinese Markets Tumble as Newly-Crowned Xi Takes Aim at Wealthy

By Geoffrey Smith 

Investing.com -- Chinese stock markets suffered one of their worst ever trading days on Monday, amid fears that President Xi Jinping may use his re-election at the weekend to renew his campaign against the country's biggest businesses and their owners.

Hong Kong stocks were particularly badly affected, with the Hang Seng index falling as much as 6% and Hang Seng Tech Index Futures falling over 8.2% to an all-time low, after Xi completed his expected consolidation of power at the National People's Congress in dramatic circumstances.

In a speech at the congress, Xi had also called for “regulating the mechanism of wealth accumulation”, which was also seen as him taking aim at the country’s richest businessmen.

The NPC also confirmed widespread expectations that Xi would pack the Politburo’s standing committee, the most powerful decision-making body in the government, with his own loyalists. More pro-business figures familiar to western markets, such as Premier Li Keqiang and trade representative Liu He, were both removed from office.

However, Xi’s consolidation of power was most vividly illustrated by a piece of theatre toward the end of the Congress, when his predecessor Hu Jintao was escorted from the podium at Xi’s instruction, despite his visible reluctance to leave.

Hu had been the most powerful man in China for 10 years, and his apparently premeditated humiliation on national television sent a powerful message, analysts said.

“One thing for sure is that he wasn't feeling unwell or wanted to go to bathroom anything,” said John Hopkins Professor Ho-fung Hung tweeted, adding that Xi had called on aides to take him away, “nearly forcefully”.

Alibaba (HK:9988) (NYSE:BABA) stock fell 11%, while Tencent Holdings Ltd (HK:0700) stock fell 9.5%. Both have been targeted during the last five years by Beijing’s regulator in what was widely seen as a political campaign to stop their unprecedented economic power and wealth becoming a threat to the Communist Party’s political supremacy. Elsewhere, search giant Baidu (HK:9888) fell 12% and food delivery group Meituan (HK:3690) fell 13.6%.