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The Nasdaq Golden Dragon China Index, which tracks 98 of the largest Chinese companies in the United States, is down about 20 percent in the past three trading days, its biggest drop ever.
The collapse of US-listed Chinese stocks accelerated on Tuesday, capping another day of losses as investors shunned assets amid a wide-ranging crackdown by regulators in Beijing.
In three trading days, the Nasdaq Golden Dragon China Index – which tracks 98 of the largest Chinese companies in the US – is down about 20%, the largest such drop ever. Stocks included in the index have lost $840 billion, or nearly half of their collective value, since hitting a record high in February.
The meter was already under pressure after China announced sweeping policy changes in the technology sector, but the defeat deepened as regulators turned to other sectors, such as online education and property management.
“We don’t see a buy-the-dip opportunity. China’s recent crackdown on regulators is the beginning, not the end, of increased control and command by Chinese leaders,” said David Trainer, chief executive officer of New Constructs, an investment research firm based in Nashville.
Markets across China collapsed on Tuesday after rumors circulated that US funds were dumping Chinese and Hong Kong assets, with analysts warning that gains could be short-lived. Tech giants including Alibaba Group Holding Ltd., JD.com Inc., NIO Inc. and Baidu Inc. were among the biggest decliners in New York, all of which fell by at least 3%.
Still, shares of education stocks such as TAL Education Group, Gaotu Techedu Inc. and New Oriental Education & Technology Group to realize a revival on Tuesday. All three won by at least 10%, although they remain 92% lower on average over the year. Other companies, including Meten EdtechX Education Group Ltd. and 17 Education & Technology Group Inc., were higher in New York at 2:12 p.m.
Despite the recovery at some educational companies, not everyone is convinced that the selling pressure has eased. “I think it’s kind of a dead cat bounce,” said Matt Maley, chief market strategist for Miller Tabak + Co. “It’s way too early to catch the falling knife,” he added.
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