China & Hong Kong Equities Push Higher, Property Lags As Sales Drop

Hong Kong and China equities opened mixed today, however are mostly higher now. China mainland equities are outperforming after earlier data showed industrial production rose to 7.0% y/y vs 5.2% expected, fixed assets rose to 4.2% y/y vs 3.2% expected, although retail sales slightly missed, coming in at 5.5% vs 5.6% expected. The Property space continues to under-perform after Longfor reported a drop in sales by 60% from a year earlier, while Yuexiu Property pulled their bond issuance.

• In Hong Kong, equities are mixed today, with property names being the worst-performing sector. The Mainland Property Index is down 1.88% as property investment fell to 9% vs 8% expected. The HSTech Index is up 1.00%, while the Biotech Index is now unchanged for the day after being down as much as 2.2% earlier, the wider HSI is up 0.20%. In China, equities are faring a bit better, the CSI300 is up 0.75%, small cap and growth stocks are the top performing with the CSI1000 up 0.90%, while the ChiNext is 2.00% higher.
• China Northbound flows were 10.32 billion yuan on Friday, with the 5-day average at 6.56 billion, while the 20-day average sits at 3.19 billion yuan.
• In the Property space, Longfor Group shares fell over 4% after Feb contracted sales fell by more than 60% from a year earlier. Yuexiu Property shares also fell over 4% after their parent company Guangzhou Yuexiu canceled the issuance of 500m 10yr and 500m 15yr bonds blaming recent significant market fluctuations.
• China's bank loans expanded at a historically slow pace in February, with yuan loans growing 9.7% year-on-year, the lowest since 2003, indicating weak borrowing demand despite central bank efforts to ease policy. Sluggish borrowing demand poses challenges for Beijing's economic growth target of around 5%, compounded by weak or negative price growth across the economy and signals from policymakers to align credit growth with growth and inflation targets.
• The CSRC plans to tighten listing requirements and increase scrutiny on publicly traded firms to restore confidence in the stock market, amidst recent declines attributed to various economic factors and regulatory concerns. The measures include re-evaluating listing standards, enhancing oversight of IPO processes, and cracking down on financial fraud, which may further slow IPO activity in a market already impacted by regulatory scrutiny and economic challenges, with IPO proceeds dropping significantly compared to previous years.
• Looking ahead, Hong Kong has unemployment data due out later today, while next up in China is the Loan Prime Rates on Wednesday