Chinese stocks also dropped a day after President Xi Jinping tightened his grip on power following the close of the Chinese Communist Party’s congress.

Hong Kong’s Hang Seng Index dropped more than 5% today to 15,305, reaching a 13-year low. China’s CSI 300 dropped 2.61% while the SSE Composite Index lost 1.68%.

In Hong Kong, shares in Alibaba Group Holding fell more than 10% while Tencent Holdings was off nearly 10%. The Hang Seng’s technology index was down more than 8.5%.

In China, the food and beverages and beauty care sectors led the drop.

The declines follow the conclusion of China’s 20th National Party Congress, where leaders who will set the country’s economic and political policies for the next five years were announced. Xi secured a precedent-breaking third term in office and has stacked the Politburo Standing Committee, the country’s highest decision-making body, with loyalists.

“The new leadership indicates more concentration in top decision-making procedure,” a report published today by the Bank of America says. “Some investors may worry about the lack of checks and balances, and the risk [that] potential policy mistakes evolve into major shocks to the economy.”

The report adds, “The future of the Covid Zero policy remains an open-ended question. Now with power more concentrated at the top, this decision hinges even more on President Xi’s views.”
The zero-Covid policy, as Beijing’s approach to containing the pandemic is known, includes widespread lockdowns and mass testing to combat even small outbreaks.

Also on Monday, China announced its third quarter gross domestic product figure, a week later than originally planned. The 3.9% year-on-year growth beat the median forecast of 3.2% by economists in a recent Nikkei survey. The result is also better than the 0.4% growth in the second quarter, which was affected by a two-month-long lockdown in the financial hub of Shanghai.