Trading Day – Big Chinese stocks selloff

Chinese stocks listed on US exchanges faced an enormous selloff on Monday due to fears of being uninvestable after Xi Jinping consolidated his power for a third term and removed rivals from office.

The Nasdaq Goldman Dragon China Index plunged 14.5% to its lowest level since 2009.

US markets continued their strong momentum last week, as the S&P 500 closed the first trading day of the week up by 1.2%.

The Nasdaq continues to lag the S&P 500 due to higher risk expectations but still climbed 0.9%.

The Nikkei 225 opened strong this morning and is up 1.1%. The Hang Seng is trading flat today after closing down by 6.3% yesterday.

Meanwhile, Jubilee Metals Group reports a huge drop in earnings despite growing revenue and cash flow.

In other news, London-based bank HSBC sees pre-tax profit drop 42% in the third quarter due to rising credit loss provisions and other impairments.

Here is the biggest news of the day.

• Chinese stocks listed on US exchanges faced an enormous selloff on Monday due to fears of being uninvestable after Xi Jinping consolidated his power for a 3rd term and removed rivals from office. The Politburo standing committee, the core circle of power in the ruling Chinese Communist Party, has been packed with Xi Jinping’s allies. The Nasdaq Goldman Dragon China Index plunged 14.5% to hit its lowest level since 2009 and was down more than 20% intraday. Tech giant Alibaba closed 12.5% lower, while Pinduoduo closed the day 24.6% lower. Naspers dropped 17.4% due to its exposure to Tencent.

• Jubilee Metals Group reports a huge drop in earnings despite growing revenue and cash flow. The company reported EBITDA of £37 million for the year, down 25% from last year. This is despite revenue growing 5.4% to £140 million and cash from operating activities growing 11%.

• HSBC’s pre-tax profit drops 42% in the third quarter on the back of rising credit loss provisions and other impairments. The London-headquartered bank posted a pre-tax profit of $3.15 billion for the quarter ended in September. That is down from $5.4 billion a year ago but still above analyst estimates. The results included a $2.4 billion hit from the sale of the bank’s business in France.

• The Public Investment Corporation (PIC) has increased its stake in Thungela resources. The asset manager now holds 14% of the voting rights attached to shares.

• Allan Gray has increased its stake in Ninety One. The asset manager now holds nearly 6.1% of the voting rights attached to shares.

• Rishi Sunak is set to become Britain’s new prime minister. It was only seven weeks after he placed second to Liz Truss in the Conservative Party leadership race. Sunak won the role of Conservative Party leader after his sole competitor, Penny Mordaunt, dropped out of the race moments before votes from members of Parliament (MPs) were due to be announced. It follows after former Prime Minister Boris Johnson also withdrew from the leadership race on Sunday.