Benchmark Indices Little Changed, Although Some Movement Under The Hood

The mainland CSI 300 added ~0.1% on Tuesday and the Hang Seng shed 0.2%, as the latter gave back a little of Monday’s late surge.

• M&A speculation continued to support some names in the financial securities/brokerage space.
• Fentanyl makers lost ground after BBG sources suggested there will be a deal struck with the U.S. re: China cracking down on Fentanyl production and exports. A reminder that Presidents Xi & Biden are set to meet on Wednesday.
• A recent BBG sources piece has suggested that “China plans to provide at least CNY1tn of low-cost financing to the nation’s urban village renovation and affordable housing programs in its latest effort to shore up the struggling property market.” While this isn’t a particularly new idea, Chinese property will likely benefit from the report on Wednesday. Note that both the CSI & Hang Seng property sub-indices edged higher on Tuesday.
• Continued speculation re: further monetary policy easing did the rounds, while RTRS sources suggested that “China has ordered its local governments to halt public-private partnership projects identified as "problematic" and replaced a 10% budget spending allowance for these ventures with a vetting mechanism by Beijing as it tries to curb municipal debt risks”
• Flow wise, net outflows from Chinese mainland equities were seen for a sixth consecutive day, as investors sold a net ~CNY2.1bn via the HK-China Stock Connect links.
• A quick reminder that the monthly economic activity data and latest MLF operation from the PBoC provide domestic points of interest early on Wednesday.