China & HK Equities Outperform Wider Asian Markets

China and Hong Kong equities are lower today, though they are faring better than other Asian markets. The CSI 300 is down less than 0.5%, making it a relative outperformer, while the HSI has dropped about 1.1%. The decline in these markets comes in the wake of a tech-led selloff on Wall Street, exacerbated by concerns over the US economy and weaker factory activity data. Earlier Caixin PMI missed estimates, while S&P Global Hong Kong PMI dropped slightly to 49.4 vs 49.5 prior.

• Major Indices in the region are holding up much better than the wider Asian markets in Hong Kong the Mainland Property Index is down just 0.62%, HS Property Index is down 1%, while in China the CSI 300 Real Estate Index is 1% lower, CSI 300 Tech is 0.90% lower, whiel the CSI EV Index is trading 1.30% higher.
• China's services sector grew less than expected in August, with the CAIXIN PMI Services falling to 51.6 from 52.1 in July, missing the forecast of 51.8. The IMF has pointed out that China's services sector is an "underutilized driver of growth" compared to peers. Despite policy efforts to support the slowing economy, the impact has been minimal, and concerns are growing, especially with the ongoing decline in the real estate sector negatively affecting consumer behavior.
• Some Chinese banks have experienced an increase in NPLs in their retail lending businesses during the first half of the year, though the overall asset quality remains stable, according to China Securities Journal. Competition for consumer and business loans has intensified, with nine banks reporting a rise in NPL ratios compared to the end of last year. Bank of Xi'an saw its NPL ratio increase by 0.37 percentage points to 1.72% by the end of June. Despite these rises, the risks in retail loans are considered manageable, per BBG.
• There is little else on the calendar for the region this week with China CPI expected on Monday.