The Chinese stock market, which showed weakness the previous day, declined again on October 21. Analysts attribute the drop to an earnings shock from CATL, the country's largest battery manufacturer. The Shanghai Composite Index closed down 0.60% at 3,713.03, the Shenzhen Component Index fell 0.82% to 11,704.35, and the ChiNext Index dropped 1.62% to 2,694.71.
Reuters identified CATL's stock plunge as the direct cause of the market decline. Shares of CATL, listed on the mainland, fell by 12.03% on the day. Although the company's third-quarter revenue rose by 58.6% year-on-year to 165.2 billion yuan, its net profit increased by only 14.5% to 21.2 billion yuan, marking a 5.8% decrease from the previous quarter. The intensifying competition among battery manufacturers, coupled with automakers developing their own battery and electrification technologies, has contributed to the decline in profit margins. This has raised concerns in the market that even as the electric vehicle and battery industries grow, increased competition could reduce corporate profits.
Investor skepticism regarding the recovery of domestic consumption in China also pressured stock prices. Analysts suggest that investors are taking a conservative view on the earnings outlook for domestic consumption-related companies ahead of third-quarter earnings announcements.
Guojin Securities noted in a report that while equity ETFs are playing a major role in buying, other capital flows remain unstable. They emphasized the importance of monitoring whether the outflow of margin financing decreases and whether the collateral maintenance ratio stabilizes.
In contrast, shares related to the pig farming industry showed strength. Donglu Group reached its daily limit, while Tiankang Biological recorded significant gains. Expectations of a rebound in pork prices, driven by accelerated production capacity reductions in China's pig farming sector, boosted stock prices. The number of breeding sows in September decreased by 0.52% to 0.86% compared to the previous month. Following a cumulative decline of over 6.5% in July and August, projections indicate that the annual reduction in pig production capacity could reach 10% in 2026.
Data management stocks also rose, with Sanwei Tiandi and Chuban Chuanmei hitting their daily limits. News of the establishment of the National Data Group Co., Ltd. in Xiong'an New Area, Hebei Province, served as a positive catalyst. The company aims to promote the development and utilization of data resources, realize the economic value of data elements, support artificial intelligence (AI) development, and invigorate the data industry ecosystem.
Meanwhile, the People's Bank of China set the yuan's central parity rate against the dollar at 6.7192 yuan, a decrease of 0.0008 yuan from the previous day, reflecting a 0.01% increase in the value of the yuan.
* This article has been translated by AI.
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