Higher, But Gains Limited As Mainland Property Sector Worry Remains Evident

Chinese and HK equity benchmarks were higher on Wednesday. The CSI 300 finished +0.2%, while the HSI was +0.8%

• Both closed off best levels.
• Early positive momentum reflected PBoC headlines, with the Bank noting that it will use 'precise, forceful policy' to boost the economic recovery.
• Elsewhere, speculation surrounding PBoC liquidity provisions also aided the space.
• China’s August industrial profit data also contributed, given the improvement in the print, although base effects played a role.
• Still, real estate jitters persist, limiting rallies and keeping indices near YtD lows.
• The latest news flow on that front saw reports that Evergrande’s Chairman has been put under police surveillance.
• More broadly, credit and stock overhang worries continue to weigh on the sector. The BBG measure of mainland property developer stocks closed at a fresh YtD low but failed to take out the November ’22 intraday lows.
• Light net buying of mainland shares (CNY1.8bn) via the HK-China Stock Connect schemes was seen, although flows on that front remain heavily titled towards net selling on a trend basis.