HSI Outperforms On Tech Rally, International Investors Break Run Of Chinese Outflows

Benchmark mainland Chinese indices nudged higher on Wednesday, with the CSi 300 adding 0.7%. The Hang Seng outperformed the mainland benchmark handily, adding 3.9% on the day, aided by a strong rally in tech names.

• Firmer than expected retail sales data (albeit subject to particularly weak base effects in Y/Y terms) headlined the monthly suite of Chinese economic activity data.
• Property developers benefitted from Tuesday’s BBG report re: the latest leg of government support for the troubled property sector. Also note that headwinds re: home sales and property investment deepened (per October data), highlighting the need for further support. The Hang Seng property index added the best part of 5% on the day.
• Elsewhere, renewable energy-related names moved higher after China reaffirmed its commitment re: tackling climate crisis alongside the U.S.
• Tech names generally benefitted from expectations re: Fed policy easing post-U.S. CPI.
• Tencent released earnings after hours, with revenue roughly meeting wider expectations and headline profit metrics generally beating.
• More widely, speculation surrounding further deposit rate cuts at commercial banks did the rounds, while reports noted that Chinese regulators have told securities firms to stop expanding OTC derivatives operations involving individual stocks.
• Flow wise, international investors bought a net CNY3.6bn of mainland equities via the HK-China Stock Connect links on Wednesday, ending a run of six consecutive days of net sales.
• Immediate focus out of China falls on the impending Biden-Xi summit, later Wednesday in San Francisco.