Hong Kong Equities Surge Higher, Mainland Property Index Up 5%

Hong Kong equities have surged higher and are out-performing mainland China equities. The Fed Reserves signally it remains on track for three rate cuts for the year despite higher inflation have help push markets higher, while Asian gold miners are benefitting from gold prices rose above $2,200 an ounce for the first time. China property developer Radian Holdings defaults on their offshore bonds, while Chinese regulators plans to intensify delistings.

• Hong Kong equities are surging higher on Thursday, with the Mainland Property Index brushing off Radiance Holdings bond default to trade up 5%, while the HSTech Index is trading 2.71% higher, the wider HSI is up 2.30%. In China equity markets are higher although lagging the move higher by HK equities, the CSI300 is up 0.30%, while the smaller cap CSI1000 is 0.20% higher.
• China Northbound flows were -5.6 billion yuan on Wednesday, with the 5-day average at 3.62 billion, while the 20-day average sits at 2.911 billion yuan.
• In the Property space today, Chinese developer Radiance Holdings Group Co. defaulted on a $300 million bond amid a sales slump, citing extreme pressure in the property sector and lack of improvement in sales. This default highlights ongoing challenges in China's real estate market, with more defaults expected as home sales remain weak despite policy interventions.
• Chinese regulators will intensify delistings to ensure a stronger market survival mechanism, with five companies delisted this year, primarily due to trading below one yuan, highlighting the importance of maintaining quality in the capital market. Delistings are seen as crucial for enhancing the quality of listed companies, and stakeholders of delisted firms remain accountable for any wrongdoing even after delisting.
• The urgency for a significant move in China's monetary policy has lessened amid the ongoing economic recovery, with analysts suggesting that monetary policy is currently in an observation period, indicating a low likelihood of further easing in the short term. While China is not expected to reduce banks' reserve requirement ratio or interest rates in the second quarter, there remains potential for such measures later in the year to align with an increasingly active fiscal policy and to provide timely support for fiscal implementations.
• Looking ahead, the calendar is light for the remainder of the week for China, while Hong Kong has Balance Of Payments and CPI data due out later today.