Fresh Multi-Year Lows For CSI 300

MNI (London) - Weakness in Chinese & HK equities stands out on Monday, with the CSI -1.3% and the Hang Seng -1.9%.

• HSI bears target the Dec ’23 lows, while the CSI 300 looked through its own late ’23 base, with the index hitting the lowest level seen since ’19.
• We flag several potential drivers for the broader move lower:
• Zhongzhi’s bankruptcy news from late last week.
• Late in the day RTRS sources suggested that “China's securities regulator is allowing mutual fund managers to sell more shares than they buy each day, removing a ban introduced late last year aimed at propping up a flagging stock market.”
• Local reports pointing to Chinese authorities tightening scrutiny of offshore borrowing on the part of LGFVs. This contributes a portion of the pressure stemming from continued worry re: well-known areas of economic risk.
• Continued tension with the U.S. re: trade matters.
• Some desks pointed to CBBC hedging-related weakness in HK.
• More granularly, news surrounding a criminal probe at Evergrande NEV will have had a negative impact on sentiment.
• JD Logistics struggled on the back of a price target downgrade at a brokerage.
• CICC led mainland brokerage names lower as a major shareholder outlined a plan to cut its stake in the name.
• Conversely, Morgan Stanley’s outlook for screen display producers supported that space.
• HK-China Stock Connect flows generated ~CNY4.3bn of net sales for mainland equities.