Early Gains Given Back On Tuesday

Benchmark indices gave back all/most of their early Tuesday gains, with the CSI 300 finishing 0.1% higher, while HK’s Hang Seng was 0.3% worse off.

• Continued economic worry and net sales of HK equities by mainland investors (a net HK$2.4bn sold via the HK-China Stock Connect links) were touted as drivers of the pullback.
• Mainland trade saw notable outperformance for the property sector on the back of BBG’s late Monday sources report suggesting that authorities had started to draft a list of 50 real estate firms that would be eligible for financing.
• That, coupled with a positive lead from Wall St., provided initial support in early Tuesday trade.
• Xiaomi struggled, with desks flagging profit taking-like behaviour in the wake of a strong set of quarterly earnings.
• AI names traded on the front foot, with goings on at OpenAI and impending Nvidia earnings eyed.
• Kweichow Moutai shares benefitted from the declaration of a special dividend.
• Net flow via the HK-China Stock Connect links was essentially neutral on the day, printing in marginally positive territory.
• Speculation re: the PBoC requesting that banks roll forward some of their Q124 lending into the current quarter (while limiting Q124 lending) has done the rounds via BBG and RTRS sources.
• Net HK-China Stock Connect flow surrounding mainland shares was essentially neutral on the day, printing in marginally positive territory.