China Equities Out-Perform, Tech Stocks Lower After AMD Ban

Hong Kong and China equities plummeted on the open down 1-3%, however there was a sharp reversal especially in China Large Cap equities, with the CSI300 now 0.50% higher, after being down 0.60%. The market is focused on the NPC meeting in Shanghai. So far, major headlines indicate China's GDP growth target for this year is around 5%, a budget deficit of 3% of GDP, an increase in urban jobs by 12 million, targeting an urban unemployment rate of 5.5%, boosting defense spending by 7.2%, and setting a CPI growth target at 3%.

• Hong Kong Equity are underperforming with the HSTech Index the worst performing area of the market down 3.18% after the US Commerce Department announced it will bar exports of powerful AI processors made by AMD to China, the Mainland Property Index is down 2.10%, while the HSI is off 2.10%. China's National Team may have supporting the local markets today as equity markets gapped lower on the open only to be bid back up very quickly, while large cap are out-performing smaller cap indices in line with what National Team mandates. The CSI300 up 0.45%, the smaller cap CSI1000 is down 0.60%.
• China Northbound flows were -7.1b yuan on Friday, with the 5-day average now 3.5b, while the 20-day is at 2.66b yuan.
• Country Garden's sales drop the most in seven years amid wind-up fears, while contracted sales plunged 85% from the same period a year earlier verses 75% fall in January. Meanwhile, Vanke, China's 2nd largest developer by sales has seen their equities and bonds plunge in value as investors grow concerned over their ability to continue servicing their debts.
• Goldman was out earlier noting that they expect China's three pillars (Property, Infrastructure and Exports) of growth will weaken over the next decade and caution investors from adding to exposure in the region.
• Earlier Hong Kong had S&P Global PMI at 49.7 a decline from the prior month of 49.9., while Caixin China PMI Composite was unchanged at 52.5, and Caixin China PMI Services was 52.5 vs 52.9 expected
• Looking ahead, the NPC meeting will continue over the next few days although there is no set time frame, although expected to last about a week.