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Hong Kong and Chinese Stocks Surge on Market Stabilization Measures

EQUITIES
Hong Kong & Chinese stocks surged today as authorities targeted quant funds, contributing to recent measures to stabilize the market. While banks approved significant loans for property projects pushing property names higher

  • As we head into Asia lunch, markets are higher across the board after a slow start on the open. Hong Kong equites outperform mainland equities, the HSI is up 3.00% after initially opening down 0.70% and bouncing off the 50-day SMA, HSTech index has brushed up broader market weakness on tech names to trade up 4.48%, while the Mainland property index is 4.00% higher.
  • China mainland equities are higher today, although have underperformed vs Hong Kong, the CSI 300 is up 1.80%, while the ChiNext is up 1.28%
  • Property names are being supported by the yesterday's announcement that Chinese banks had approved 123.6b yuan of loans for property projects since January and had started issuing the funds. While Hong Kong’s developer association and politicians are putting pressure on the government to remove extra property levies ahead of the budget planning announcement next week.
  • China's major stock exchanges froze the accounts of quantitative hedge fund Ningbo Lingjun Investment Management for three days after it rapidly sold 2.57 billion yuan ($360 million) in shares, disrupting normal trading order. Chinese regulators are increasing scrutiny on quant funds amid concerns about market volatility, prompting the exchanges to tighten supervision and extend reporting scope to include northbound investors via the mainland to Hong Kong stock connect.
  • Finally Market participants are reportedly discussing the potential suspension of Chinese onshore stock listings as authorities further look to stabilize the domestic market. There is division among participants on whether to halt IPOs, however consensus remains for regulators to maintain stringent thresholds and boost oversight in the listing process
  • Looking ahead to Thursday and China has Swift Global Payments data out, while Hong Kong will have CPI data.
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