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Hong Kong Equities Outperforms, China Vanke In Debt Swap Talks

ASIA STOCKS
Hong Kong equities show slight gains today, led by a strong performance in the HStech Index, up 0.80%, despite a 0.69% dip in property names, the Mainland Property Index remains robust, up 10.72% since March 7th. In China, indices experience mixed results, with the CSI300 down 0.58%, the CSI1000 up 0.41%, and the ChiNext down 0.42%. China Northbound flows were 4.2 billion yuan on Thursday. China Vanke engages in debt swap talks to avert its first bond default, discussing the conversion of bond holdings into secured debt, amid liquidity pressure and a Moody's downgrade to junk status. Country Garden faces reports of onshore bondholders missing coupon payments, while China contemplates RRR cuts, lower MLF rates, and increased pledged supplementary loans in Q2 to meet capital requirements, as suggested by the China Chief Economist Forum.
  • Hong Kong equities are slightly higher today with the HStech Index the top performer up 0.80%, while property names are down 0.69%, the Country Garden default doesn't seem to have had much of an impact as the Mainland Property Index is up 10.72% since March 7th. Elsewhere the Biotech Index is down 1.44%, while the HSI is up 0.24%. In China, equities indices are mostly lower with the CSI300 down 0.58%, the CSI1000 is up 0.41% while the ChiNext is down 0.42%
  • China Northbound flows were 4.2 yuan on Thursday, with the 5-day average at 3.38b, while the 20-day average sits at 3.02b yuan.
  • In the property space, China Vanke is reportedly in discussions with banks for a debt swap that could avert its first-ever bond default, involving the conversion of tens of billions of yuan in bond holdings into secured debt. The talks, coordinated by China's financial regulators and the Shenzhen government, are ongoing, with the potential plan subject to change, and Vanke faces liquidity pressure amidst declining property sales and a Moody's credit rating downgrade to junk status. Elsewhere is has been reported that Country Garden onshore bondholders have not received coupon payment due on March 12th. China Garden plans to raise money for the payment within the 30-day grace period.
  • Elsewhere, China may cut banks RRR and lower the MLF rate in the second quarter and also offer more pledged supplementary loans to meet capital requirements according to China Chief Economist Forum.
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