HK & China Equities Lower On Lack Of Policy Support

China and Hong Kong equities are lower today with Chinese stocks on course to wipe out this year’s gains as investor sentiment weakens ahead of a key policy meeting. The CSI 300 Index dropped as much as 1.3% on Friday, with information technology and consumer discretionary sectors performing the worst. This marks the seventh straight week of losses for the index, the longest downturn since early 2012, with turnover on the mainland at its lowest in nearly a year. the main factors include for soft equities are a weak domestic economy especially the property sector, low expectations for economic support, concerns over European political changes, and potential anti-China actions if Trump is re-elected. Additionally, Chinese EV makers and auto names are lower due to the EU's imposition of provisional tariffs on EVs imported from China.

• Hong Kong equities are lower today, the HSTech Index is down 1.81% and on track to finish the week little changed. Property indices surged higher earlier in the week, although have ended the week on the back foot, with the Mainland Property Index off 1.65% today, while the HS Property Index is down 0.65%, the wider HSI is off 1%.
• China equity markets are also lower today, and are on track to finish the week down 2-4%. The CSI 300 is currently down 1.10%, while small-cap indices the CSI 1000 and CSI 2000 are faring a touch better and trade unchanged for the day although about 3% lower for the week, while the growth focus ChiNext is down 0.25% today and 3.50% lower for the week.
• The European Union is imposing higher customs duties on electric vehicles imported from China, citing unfair government subsidies that allow Chinese carmakers to undercut European rivals, with provisional rates set until a final decision in November. This move aims to protect the European auto industry and jobs while balancing trade practices, amidst concerns of potential retaliation from China and ongoing negotiations for a solution
• The upcoming Third Plenum is expected to focus on reinforcing President Xi Jinping’s long-term goals such as technology self-sufficiency, urbanization, rural reform, and fiscal/tax revamps, rather than introducing major policy changes, amid low investor expectations and ongoing economic challenges, this meeting will run from July 15-18th.
• Looking ahead to next week China CPI & PPI are expected on Wednesday.