HK & China Equites Lower, State Council Looks To Stabilize Housing

Hong Kong and China stocks opened lower on Tuesday after the long weekend break, reflecting a broader sell-off across Asia. Chinese tourism-related stocks faced pressure as Citigroup reported weak travel demand during the recent three-day holiday. Despite some growth in domestic travel traffic and revenues, average spending per traveler remained subdued compared to pre-pandemic levels. Tech stocks are lower following Apples recent AI event.

• Hong Kong equities are lower today, HSTech Index is down 1.24%, while the Mainland Property Index is down 2% and the HS Property Index is down 2.60%, the HSI is down 1.70%
• China onshore equities are mixed today, the CSI300 Real Estate Index is down 0.20%, small-cap indices are lower with the CSI1000 is up 0.15% the CSI2000 is unchanged, while the CSI300 is down 1.20%.
• In the property space, Builder Dexin China is facing court-ordered liquidation in Hong Kong following a winding-up case, initiated by China Construction Bank due to the nonpayment of $350 million in senior notes. Despite receiving approval from scheme creditors in May 2023, Dexin failed to restructure in line with the plan, leading to the court's decision. The State council has urged officials to keep formulating new policies that will help absorb existing housing stocks and stabilize markets, per BBG.
• China plans to increase fiscal spending in the latter part of the year by issuing 920 billion yuan ($127 billion) in ultra-long special sovereign bonds between June and November, alongside the acceleration of local government special bond issuance, aiming to strengthen its economic recovery.
• Banks are likely to lower deposit rates due to shrinking net interest margins, prompting investors to shift focus to short-term government bonds amid expectations of further policy easing by the PBoC. This move aims to deter corporations from seeking higher returns by depositing low-cost credit into accounts with better interest rates, especially as substantial deposits have recently flowed into wealth management products for enhanced yields.
• (MNI) China Press Digest June 11: Housing, Economy, Tourism (See link)
• Looking ahead: China PPI & CPI are due out tomorrow