Xi Jinping has secured a third term as China's leader and appointed a team of loyalists. This was immediately responded by market participants.
Quoted from CNN , Thursday (10/27/2022), Chinese stocks listed in Hong Kong and New York immediately fell on Monday. Then, the yuan hit a nearly 15-year low against the US dollar a day later.
Analysts say Xi's preference is a bad sign for China's economic prospects. They say replacing experienced economic officials with people with far less experience also signals a more ideologically driven policy that stifles the private sector and worsens China's relations with the US.
"The market is clearly disappointed with the new seven-person Politburo Standing Committee filled with Xi allies," said Lilian Co, managing director of Strategic China Panda Fund at Eric Sturdza Investments.
"Because Xi's ideology has not been market-friendly in recent years, the leadership team loyal to Xi means there is no change in policy direction during his time in power," he continued.
On Wednesday, the yuan reversed course and stocks rose slightly following a coordinated statement by the Central Bank of China and various regulators that they would maintain the stability of the currency, Chinese market and financial system.
Several senior officials who supported market reform and opening up the economy were missing from Xi Jinping 's new team . They are Premier Li Keqiang, Deputy Premier Liu He, and central bank governor Yi Gang.
Investors worry that Xi will continue policies such as zero COVID-19 and a crackdown on the private sector that has caused serious damage to China's economy.