HK Closed, China Equities Mixed As Property Heads Lower

Hong Kong equity markets are close today and will re-open on Tuesday. Mainland China equities have opened marginally higher today, property names are the worst performing index with the CSI300 Real Estate Index down 1.58%, while tech names are the largest drag on performance today, with semiconductor names the worst performing in the space, while energy and Financials are the top performing sectors in the region. Large-cap names are out-performing smaller cap with the CSI300 up 0.25%, while the CSI1000 is down 0.40%.

• China Northbound flows were 2.33billion yuan on Thursday, with the 5-day average at 0.45billion, while the 20-day average sits at 1.10 billion yuan.
• In the property space, Country Garden delayed its earnings report for 2023 beyond the March 31 deadline, citing the need for more information. This unexpected announcement comes after the company faced challenges, including defaulting on dollar debt in October and missing a coupon payment on a yuan bond this month. Moreover, a Hong Kong court received a creditor’s petition to wind up the company following the default. China Vanke reported a significant decline in net income for 2023, marking the biggest drop since its 1991 listing. The company aims to reduce debt by over 100 billion yuan in the next two years as part of its deleveraging strategy. Notably, Vanke decided to forgo proposing a cash or stock dividend for the first time since its listing. Despite facing challenges, such as its stock hitting record lows in Hong Kong, some of its bonds traded above 90 cents, indicating less immediate investor concern
• China's largest state-owned banks, including Agricultural Bank of China Ltd. and Bank of China Ltd., reported modest earnings growth for the previous year, with margins weakening due to downward pressure on interest rates and a slowing economy. Net income at Agricultural Bank of China rose 3.9% to 269.36 billion yuan, while Bank of China's earnings increased 2.4% to 231.9 billion yuan. The major driver to the weaker released has been seen as China's slowing economy and the prolonged property downturn have put pressure on interest rates and asset quality. State-owned banks are facing challenges in maintaining growth while managing problematic property loans and supporting developers as per Beijing's directives.
• Looking ahead. China has PMI data on Sunday and Caixin China PMI on Monday