CSI 300 Unwinds Re-Opening Gains, ’22 Lows Eyed

Benchmark Greater China equity indices were lower ahead of the weekend, with the mainland CSI 300 and HK’s Hang Seng both losing ~0.7%.

• Technically, bears nearly managed to test 3,500 in the CSI 300, with the ’22 closing lows breached at one point. That was before a tepid recovery from worst levels of the day ahead of the close.
• A break below 3,500 would expose the nearby ’22 low (3,495.95).
• The COVID re-opening related gains in the index have now been reversed, with the CSI 300 ~17.8% off YtD highs and ~9.3% lower on the year.
• A record net daily reverse repo injection from the PBoC did little for broader sentiment.
• Continued worry re: well-defined Chinese economic headwinds were touted as a driver, although the CSI and Hang Seng property indices managed to lodge incremental gains on the day.
• The property index probably benefitted from a RTRS sources report suggesting that “a major group of Country Garden offshore bondholders has appointed PJT Partners as financial advisors to lead discussions with the troubled Chinese property developer.”
• Another round of net daily selling (~CNY1.6bn) of mainland shares was seen on the HK-China Stock Connect schemes.