Foxconn Fear & Continued Property Market Tumult Push CSI 300 To ’19 Levels

MNI (London) - Worry re: a Beijing crackdown on Foxconn (Hon Hai was down 2.9% in Taipei trade) weighed on sentiment when it came to Chinese equities, with Friday’s negative lead from Wall St. factoring in as well.

• Capital outflows seen via monthly FX data also weighed, although the HK/China Stock Connect was closed on the back of a holiday in HK.
• The Hang Seng was also closed.
• Property-centric worry also continues to dominate, although most now expect China to meet its annual GDP growth target of around 5% after Q3 GDP data topped exp.
• These negatives comfortably outweighed any positives derived from the lack of escalation in the Israel-Hamas conflict.
• The mainland CSI 300 breached it’s ‘22 base and closed below 3,500 as a result. The index shed ~1% on Monday leaving it at the lowest level seen since ’19.
• Most look for continued fiscal and monetary stimulus from Beijing in the coming months.
• Also note that calls are growing louder re: the need to loosen property market restrictions.
• The government continues to attempt to promote an economic rotation, although the sheer size of the property sector and related economic activity mean that sentiment re: the sector will continue to have an impact in the immediate term.
• Policymakers continue to look to improve the functioning of mainland equity markets, along with tightening regulation.