HK Losses Outpace Mainland Moves

The benchmark CSI 300 shed 0.7% on Tuesday, trimming some of Monday’s property stimulus-driven rally.

• Softer than expected Caixin services PMI data will have provided headwinds in top-down terms.
• News re: Country Garden servicing interest payments for two USD-denominated bonds did little for broader sentiment.
• Widely watched equity metrics in China, including the HSCEI, outpaced losses in mainland benchmarks.
• The usual profit taking talk was also noted.
• On the flow side BBG reported that global funds have reduced their exposure to Chinese stocks, citing a report from Morgan Stanley. The bank indicated such exposure had fallen to the lowest level seen since October ’22 (average underweight exposure has moved back to ZCS time levels).
• More granularly, offshore investors reverted to net sales of mainland equities via the HK-China Stock schemes (~CNY4.6bn), after registering the largest round of net inflows seen since late July on Monday.
• Thursday’s trade balance data presents the highlight of the week when it comes to Chinese data, while inflation data will cross over the weekend.