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EQUITIES: China & HK Equities Struggle, Investors Hope For Further Stimulus

EQUITIES
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The continued underperformance of Chinese and Hong Kong equities, following last week's sharp sell-offs, underscores the market's need for stronger policy support to regain investor confidence. Weak earnings from Tencent and Alibaba have dampened sentiment, adding pressure for additional stimulus measures to attract buyers. Last week’s high trading volumes suggest that investors who returned following the first round of stimulus measures were announced may now be taking profits and exiting, further weighing on momentum.

  • Hong Kong & China equities are trading in very tight ranges today, major benchmarks now wrapped around unchanged for the day, and off earlier highs after a move higher in global risk markets following the Nomination of Scott Bessent to US Treasury Secretary. The CSI300 is -0.10%, while the HSI is now trading flat.
  • The likelihood of a RRR cut by the PBOC is rising as year-end approaches, according to a China Securities Journal report. Analysts suggest the central bank will continue deploying various monetary tools to ensure sufficient market liquidity. Last month, PBOC Governor Pan Gongsheng indicated a potential RRR reduction of 25-50bps by year-end, contingent on liquidity conditions.
  • A new round of consumption vouchers has been issued across the country to stimulate domestic demand and boost confidence with major cities such as Shanghai, Beijing, Chengdu, Hangzhou, Zhengzhou and Wuhan all participating per the Economic Information Daily.
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The continued underperformance of Chinese and Hong Kong equities, following last week's sharp sell-offs, underscores the market's need for stronger policy support to regain investor confidence. Weak earnings from Tencent and Alibaba have dampened sentiment, adding pressure for additional stimulus measures to attract buyers. Last week’s high trading volumes suggest that investors who returned following the first round of stimulus measures were announced may now be taking profits and exiting, further weighing on momentum.

  • Hong Kong & China equities are trading in very tight ranges today, major benchmarks now wrapped around unchanged for the day, and off earlier highs after a move higher in global risk markets following the Nomination of Scott Bessent to US Treasury Secretary. The CSI300 is -0.10%, while the HSI is now trading flat.
  • The likelihood of a RRR cut by the PBOC is rising as year-end approaches, according to a China Securities Journal report. Analysts suggest the central bank will continue deploying various monetary tools to ensure sufficient market liquidity. Last month, PBOC Governor Pan Gongsheng indicated a potential RRR reduction of 25-50bps by year-end, contingent on liquidity conditions.
  • A new round of consumption vouchers has been issued across the country to stimulate domestic demand and boost confidence with major cities such as Shanghai, Beijing, Chengdu, Hangzhou, Zhengzhou and Wuhan all participating per the Economic Information Daily.