Another Fresh Cycle Low For CSI 300

Another heavy session for Chinese equities, with familiar sources of economic worry and a slightly negative lead from the U.S. applying some weight.

• The CSI 300 shed 1.9%, with the index breaching the 3,400 level for the first time since ’19.
• The Hang Seng also lost 1.9% but continues to operate well above it’s ’22 base.
• Moody’s tweak of China’s sovereign credit rating outlook to negative (A1 rating affirmed), with the same sources of worry (property & LGFVs, as well as a longer term move lower in GDP growth) will likely weigh on confidence in the early rounds of tomorrow’s session, unless we get a meaningful headline/equity-supportive flows in the interim.
• China headlines were dominated by speculation surrounding further easing, next year’s official GDP growth target and potential support for certain areas of the tech sphere.
• Property sub-indices continued to struggle at the headline level.
• Equities shrugged off a firmer-than-expected Chinese Caixin services PMI.
• On a micro level, WuXi Biolgics extended the guidance-driven sell off that triggered a halt to trading on Monday.
• Lenovo struggled as it became apparent that the company’s Chairman had reduced his holdings in the name.
• Flows via the HK-China Stock Connect scheme saw another round of net daily selling for mainland equities, with CNHY7.5bn offloaded on the day.