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China ADRs tumble as Xi’s new team sparks worries
STORY: U.S.-listed shares of Chinese companies plummeted on Monday after President Xi Jinping’s new leadership team sparked investor concerns that ideology-driven policies would be prioritized at the cost of private sector growth.E-commerce giants Alibaba, JD.com and internet behemoth Baidu all crashed Monday morning, even as the benchmark S&P 500 edged higher.The steep drop comes after Xi secured a precedent-breaking third leadership term on Sunday and introduced the new Politburo Standing Committee stacked with loyalists. It also follows a strange scene during the closing ceremony of the Communist Party Congress on Saturday, when former President Hu Jintao, seated next to Xi, was escorted off the stage.Strategists at TD Securities said “the departure of perceived pro-stimulus officials and reformers … and replacement with allies of Xi, suggest that ‘Common Prosperity’ will be the overriding push of officials.”Rick Meckler, a partner at Cherry Lane Investments said the “concern is that the Chinese government is continuing to move to a more socialist economic model under Xi which may require Chinese companies to place ever more focus on social goals rather than profitability.”Earlier in the day, Hong Kong stocks slumped to 13-year lows as investor worries over the direction of the world’s second largest economy overshadowed upbeat third-quarter growth data. Shares of Chinese electric vehicle companies Nio, Xpeng and Li Auto fell significantly as well on Monday.The EV makers were also weighed down by Tesla cutting the price of cars in China for the first time this year, indicating signs of softening demand in the world’s largest auto market.