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HK & China Stocks Mixed, Third Plenum Gets Underway, Data Mixed

ASIA STOCKS

China & Hong Kong's equity markets are mixed today. Investors are closely monitoring the Third Plenum policy meetings that kicked off today although there has yet to be any headlines out in relation to it. While earlier the PBoC maintained it's 1yr MLF at 2.50% which was widely expected, there was also a flurry of other China data out, GDP was 4.7% vs 5.1% expected, while industrial Production was 5.3% vs 5.0% expected, and Retail Sales were well below expectations coming in at 2.0% vs 3.4%.

  • Hong Kong equities are lower today with the HSTech Index is down 2.45%, property stocks are the worst performing with the Mainland Property Index down 2.63% and the HS Property Index is down 2.20% the wider HSI is down 1.40%.
  • China equity markets are mixed today with the CSI 300 is 0.20% higher, small-cap indices are lower with the CSI 1000 down 0.70% and the CSI 2000 is down 1.45%, while the growth focused ChiNext is off 0.55%.
  • The Biden administration imposed visa restrictions on Chinese officials for alleged human rights abuses, while Beijing sanctioned six US companies involved in arms sales to Taiwan. The US cited repression in Xinjiang, Hong Kong, and Tibet, while China claimed the arms sales violated its sovereignty. This escalation follows renewed US criticism of Beijing's support for Russia in the Ukraine conflict, with President Biden warning of potential cuts in European investment in China if this support continues.
  • China's Third Plenum kicks off today until the 18th and is anticipated to consolidate existing policy directions rather than introduce and new groundbreaking shifts in a change from previous meeting. The focus will likely be on reinforcing recent policy strategies to foster long-term growth drivers, enhance stimulus effectiveness, and tackle challenges like a potential housing downturn, rising barriers to foreign markets and critical technologies, and demographic pressures. With a 5% growth target for the year, the Plenum aims to bolster economic confidence, though the absence of major new initiatives could risk disappointing expectations, according to BBG.
  • Looking ahead, focus will be on any headlines from the Third Plenum.

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