Deflation Angst Eats Away At Tech Relief Rally

MNI (London) - Deflation angst limited the early bid in Chinese equities, with the early uptick linked to fines which many perceive to represent the end of the crackdown on the country’s big tech names and Ant Financial’s share buyback offer.

• Tech outperformance vs. the benchmark remained evident, with the CSI 300 adding ~0.5% come the close, ending a little above session lows as participants weighed up stimulus prospects vs. economic headwinds.
• Weekend news flow saw the airing of headlines flagging a fee reduction re: mutual funds, with the aim of incentivising market participation. It also followed comments from a prominent Chinese social media influencer, Hu Xijin, who suggested that Chinese citizens should buy mainland stocks, not property.
• Elsewhere, U.S. Tsy Secretary Yellen’s visit to China generated positive reactions from both parties, although improved optics re: the relationship seemed to represent the most meaningful outcome, with little in the way of warmer tones evident in Monday’s briefing from China’s foreign ministry.
• Small net inflows for mainland shares were lodged via the northbound Hong Kong Stock Connect schemes on Monday.
• Worry re: the freeing up of CNY200bn of cash deployed at mutual funds (after a 3-year lock up period) is also noted.