U.S.-Listed Chinese Stocks Plunge Amid Disappointment Over Beijing’s Fiscal Support Plan

Major U.S.-listed Chinese stocks took a sharp dive on Tuesday after investor enthusiasm over Beijing’s fiscal support plan waned, leading to a market sell-off. The Nasdaq Golden Dragon China Index, which tracks Chinese companies listed in the U.S., was down 6.54% in midday trading, while broader U.S. markets were slightly up.

American Depositary Receipts (ADRs) of major companies saw significant declines, with Tencent falling 7.4%, Alibaba dropping 6.9%, and Meituan plunging 15.2%.

The sell-off followed a news conference in Beijing that tempered expectations of additional economic stimulus, which had fueled a recent rally in Chinese stocks. The Chinese National Development and Reform Commission was less detailed in its announcements than investors had hoped, prompting a “healthy correction,” according to Derek Yan, senior investment strategist at KraneShares. Yan suggested some investors decided to lock in gains after weeks of market optimism.

The CSI 300, which tracks major stocks on the Shanghai and Shenzhen exchanges, had recently surged to 13-month highs before Tuesday’s news. While the index managed to close up 5.9% after a slight dip, the Hang Seng Index in Hong Kong suffered its worst day since 2008, tumbling 9.4%.

Zheng Shanjie, chairman of the Chinese commission, expressed confidence that China would meet its yearly economic targets but did not unveil any new stimulus measures, disappointing those hoping for a more aggressive fiscal boost.

Yan believes Beijing is trying to manage market expectations, learning from the volatility seen in 2015. He noted that more stimulus measures could still be introduced by the Finance Ministry in the coming days to avoid a boom-bust cycle and aim for steady growth.