A Touch Lower To End The Week, Data & PBoC In Focus

The major China-linked equity indices finished lower on Friday, unwinding some of yesterday’s uptick. Losses were relatively contained, with the CSI 300 and Hang Seng both shedding ~0.4%.

• Both indices finished above their respective early ’24 lows.
• Domestic CPI data was a touch firmer-than-expected but doesn’t move the needle when it comes to PBoC expectations, given that it remains in deflationary territory, while recent PBoC communique has led to a front loading of easing expectations.
• On that front, BBG survey consensus looks for a 10bp cut in the interest rate applied to the Bank’s MLF operations on Monday.
• Chinese trade balance data produced a marginally wider-than-expected surplus, while credit/loan data was a little softer-than-expected.
• After the close the CSRC noted that it will provide more meaningful incentivisation for "countercyclical investment," along with a focus on promoting long-term investment amongst institutions. These steps are widely seen as an attempt to stabilise markets and aren’t particularly groundbreaking. Wires also noted that the CSRC has asked for an active increase in share buyback schemes, as well as flagging “good investment value” in the A-Share market.
• BYD struggled after Tesla cut prices of two Chinese car models. Note that recent headline flow has seen RTRS sources suggest that “European Commission investigators are to inspect Chinese automakers in the coming weeks as part of a probe into whether to impose punitive tariffs to protect European electric vehicle makers.”
• China Aoyuan shares moved higher on the back of U.S. regulatory news in the wake of attaining HK court approval re: debt restricting.
• HK-China Stocks Connect flows were negative for mainland shares, with ~CNY3bn of net sales seen across those channels.