Benchmarks Lower, Industrial Profits & Property Sector Weigh

Benchmark indices spent the bulk of Monday trade below flat, although closed off worst levels, with the CSI 300 -0.7% and HK’s Hang Seng -0.2%. Softer Y/Y Chinese industrial profit growth in October was seen as a relatively meaningful negative.

• In terms of macro commentary, economists pointed to the ability of China to sustain its economic recovery in ’24.
• Elsewhere, expectations for continued PBoC liquidity injections remain evident, with a focus on facilitating bond issuance and negating any further liquidity squeezes.
• RTRS sources noted that “the Beijing Stock Exchange has de facto implemented a new policy that prevents major shareholders of companies listed on its bourse from selling stock.”
• Property developer names struggled, with desks pointing to profit taking behaviour after the recent stimulus/support speculation-driven move higher, with headwinds for the sector remaining worrisome.
• Shanghai-based semiconductor names benefitted from news that President Xi will visit technology firms in the city tomorrow.
• Xi is also set to visit the city’s futures exchange.
• Elsewhere, certain medical/pharmaceutical names continued to rally, given health body comments re: acute respiratory infections surging across China.
• Headlines re: Huawei activity in the automotive sector supported partner names, while weighing on competitors.
• Northbound HK-China Stock Connect flows were effectively neutral for mainland equities, tilted to marginal net buying (CNY334mn).