China’s stock market sinks into bear territory as CSI 300 set to extend 10-week rout

The index, which tracks 300 of the largest stocks listed in Shanghai and Shenzhen, has declined for 10 consecutive weeks and is down 2.6% so far this week, underscoring sustained pressure on Chinese equities, data from LSEG showed.

Jordan Cvetanovski, chairman and CIO at Pella Funds, said China’s equity market continues to face structural challenges, particularly as the world’s second-largest economy grapples with the fallout from years of excess capacity and overinvestment.

“I think China is really struggling with reining in the problems that they’ve had in the past from the overbuild of capacity and other things,” Cvetanovski told CNBC, pointing to challenges facing companies even in globally competitive industries such as batteries — a sector where he still sees select opportunities in China.

Chinese firms have been suffering from declining profit growth amid intense competition that has eroded margins and even invited the government to step in. In September, the country posted it’s weakest growth in industrial profits this year.

The world’s second-largest economy has posted its slowest growth in over three years in the second quarter, pressured by a multiyear slowdown in the property sector and extended weakness in consumer demand.