HK & China Equities Mixed, Property Rally Stalls

Hong Kong and China equity markets are mostly lower today, the top performing sector has been intelligent/electric vehicle names after the government approved 20 pilot cities for testing smart car applications and EU member countries were divided on whether to back additional tariffs on Chinese-built electric vehicles, while after a couple of days of gains in the property sector we have hit a wall. Earlier, Hong Kong S&P Global PMI for June dropped to 48.2 from 49.2 prior, marking the lowest reading for the year and now back at Sept 2023 levels.

• Hong Kong equities are mixed today, property indices have reversed some the the gains made earlier in the week, with the Mainland Property Index down 0.90%, while the HS Property Index is 0.50% lower. Elsewhere the HSTech Index is up 0.50%, tracking gains made overnight in the US market, while the wider HSI is trading 0.05% higher.
• China equity markets are mostly lower today, the CSI300 Real Estate Index is 2.33% lower, small-caps are lower with the CSI 1000 down 1.25% and the CSI 2000 is in bear market territory after falling 24% this year and trade down 1.70% today, while the wider CSI 300 is 0.20% lower
• The latest data from China indicates that the property market's downward spiral is continuing. Despite a slight improvement in new-home sales, this was likely due to price cuts rather than a genuine recovery. The broader housing market remains weak, with falling income, weak spending, and low consumer confidence signaling ongoing trouble. May data showed home prices plunging at the fastest pace in almost a decade, and businesses and households remain pessimistic about the future, suggesting that the downward trend in real estate prices is likely to persist.
• VDA warned that planned EU tariffs on China-made electric vehicles would harm Europe's climate goals and its automotive industry, urging for a negotiated solution with China instead. The VDA emphasized that such tariffs would also negatively impact Western car manufacturers operating in China and hinder the decarbonization and competitiveness of European carmakers.