Equities Mostly Lower, Property Stocks Higher On Promising Sales

Mainland Chinese equities fell after factory activity contracted for the second consecutive month in June, raising doubts about the country's economic recovery, while Hong Kong markets are closed for HKsar Establishment day. Property stocks have rallied on the back of data showing the nations top 100 developers posted a 36% m/m increase in contract sales, although y/y sales were still down 17%.

• China equity markets are mixed today, with the CSI 300 trading 0.22% lower, small-cap indices the CSI 1000 and CSI 2000 are both down about 0.60% while the CSI 300 Real Estate Index has surged 6.05% higher.
• China's factory activity contracted for the second consecutive month in June, with the official manufacturing PMI at 49.5, indicating weak demand and posing a threat to the country's economic growth target of around 5% for the year. Additionally, the non-manufacturing PMI fell to 50.5, reflecting ongoing challenges in the construction and services sectors amid trade tensions and a prolonged real estate crisis.
• In the property space, the downturn in China’s residential real estate sector slowed in June, with new-home sales from the top 100 developers posting a 36% m/m increase although this still equated to a 17% drop y/y, compared to May's 34% decline, following easing measures in major cities. Despite some recovery, the broader market remains weak, with funding challenges for developers and ongoing bearish sentiment among investors.
• Asian regulators have tightened controls on high-frequency and quantitative trading, raising concerns about reduced market liquidity and attractiveness. While intended to stabilize markets, the restrictions have sparked debate over their long-term impact, with some fearing they could stifle innovation and efficient asset pricing.
• Looking to next week, Tuesday we have Hong Kong Retail Sales, Wednesday we have Caixin China PMI composite & Services.