A Little Firmer, Mainland Sees Largest Connect Inflows In Months, Stimulus Talk Eyed

Benchmark indices nudged higher on Thursday, with the CSI 300 +0.2% and the Hang Seng +0.3%.

• Tencent benefitted from speculation surrounding potential feedthrough of rumoured competitor pullback from some mobile gaming activity.
• Bilibili suffered from earnings related headwinds, with full-year revenue guidance disappointing. The name shed over 10% in HK trade.
• For property developers, recent headlines from the CRIC noted that top developers expect a 15% Y/Y drop in sales for ’23. While this isn’t particularly shocking given known headwinds for the sector, the base comparison (China was still under ZCS for much of ’22) further underscores the well-documented headwinds that the sector faces.
• From a policy standpoint, Beijing has started to crackdown on large firms defaulting on payments owed to SMEs, with policymakers seemingly worried re: an increase in such instances.
• On the flow side, mainland equities saw net inflows of CNY8.5bn via the HK-China Stock Connect links. This represented the largest round of net daily purchases seen across those channels since July.
• Note that slightly softer than expected official PMI data had little in the way of lasting impact, with focus turning to discussions re: fresh stimulus timelines. This, coupled with underperformance vs. global benchmark equity indices may have been the trigger for such flows.