China & HK Equities Higher, Small-Caps Up On CSRS Clarification

Hong Kong and China equity markets are mostly higher today. On Tuesday the CSI2000 was down 7.16% after a report from the CSRC, however they since clarified and said the latest delisting rules would target “zombie” listed companies but not small-cap stocks in the index, the tighter delisting rules also won’t have an impact on the market in the short term. The index has rebounded the majority of Tuesday sell-off to be up 5.50% today, although is still down around over 8% the past week, versus the CSI300 which is unchanged over the same time. Elsewhere, China's banks may become a focus today after Fitch revises down outlooks.

• Hong Kong equities are mixed today, the HSTech Index is down 0.20%, the Mainland Property Index is unchanged, while the HSI is down 0.07%. In China, the CSI300 is up 0.70%, while the focus has been on smaller-cap and growth indices with the CSI1000 up 3.28% and the ChiNext is 1.34% higher.
• China Northbound saw 2.8b of inflows on Tuesday, with the 5-day average at -0.83billion, while the 20-day average sits at 0.21billion yuan.
• In the property space, Chinese developers, saw their shares rise in Hong Kong afternoon trading, possibly due to reports suggesting the establishment of a national real estate platform to acquire unfinished properties for affordable housing. CIFI Holdings closed 4.5% higher, while Sunac China rose 4.4% and Sino-Ocean closed 4% higher. The positive sentiment followed news that CIFI had received government financing support for 15 projects, with 68 projects included in the "white-list." However, concerns about falling home prices persisted, with Bloomberg's gauge of Chinese developers' stocks narrowing losses to 2.4%.
• On Tuesday, Chinese President Xi Jinping defended his country's export practices during talks with German Chancellor Olaf Scholz, highlighting the positive impact of China's clean technology exports on global inflation and climate change efforts. Despite Western pressure to address overcapacity and unfair trade practices, Xi emphasized the importance of objective market perspectives and warned against protectionism, while Scholz pressed for better market access and fair competition conditions for German firms during his visit to China.
• Looking ahead, Hong Kong has Unemployment data due on Thursday, while China's 1 & 5 yr LPR on Monday is the next focus