CSI 300 Adds Over 2%, Mainland Sees Largest Stock Connect Net Inflow Since July

The major Chinese-linked equity indices finished higher on Thursday, building on Wednesday’s tech-driven gains.

• The CSI 300 added 2.3%, registering its largest daily gain in over 5 months, while the Hang Seng added 2.5%.
• Continued focus on potential regulatory relief for the gaming space (after a shock clampdown was tabled last week), coupled with lower core global FI yields, provided tailwinds.
• The CSI 300 is still on track to lodge a third consecutive annual decline but talk of the relative ‘cheapness’ in China is picking up once again, even though most participants remain more guarded than they have in previous rounds of such discussions.
• The benchmark tech sub-metrics in HK and on the mainland outperformed the CSI 300 & HSI.
• Property sub-indices also did well.
• More granularly, solar names benefitted from policymaker focus on new energy streams and allocation rotations ahead of the turn of the year.
• We also saw liquor makers draw support from a report pointing to some price rises from Kweichow Moutai.
• Flow wise, the above mix of inputs promoted the largest round of HK-China Stock Connect net daily inflows seen since July for mainland equities (CNY13.6bn).
• Thinktanks and analysts continue to touch on the need for fiscal reform, improving corporate profits and galvanising consumption.
• Also note that some names have cancelled A-share refinancing plans, given increased regulatory scrutiny of such activity.