FX.co ★ Chinese stocks wipe out March gains

The Chinese stock market witnessed a significant downturn, with the CSI 300 Index erasing its March gains. On March 27, the onshore benchmark index reversed and dropped below the level posted on the last trading day in February.

According to Bloomberg, the plunge came as investors pulled nearly a billion dollars out of stocks, marking the biggest one-day outflow in more than two months.

Investor sentiment was bruised by disappointing earnings from BYD Co., Wuxi Biologics Cayman Inc., and China Mengniu Dairy Co. The raft of corporate reports proved to be worse than expected, which undermined confidence among market participants and prompted them to flee their stocks.

However, no reverse to the upside is foreseen anytime soon. Morgan Stanley analyst Laura Wang warns that downward earnings revisions could last through late April. Meanwhile, other experts still have doubts as to whether China will be able to achieve its ambitious economic growth targets.

Geopolitical risks add to the drama. Potential risks in the form of fresh sanctions and accusations could hurt earnings and force investors to dump stocks.

Despite all this, China’s President Xi Jinping sought to reassure foreign businesses about the country’s economic health during a meeting with top US executives. According to the leader, China remains an attractive investment destination.