Industrial Profits Curtail Mainland Gains, Hang Seng Outperforms

Chinese equities failed to capitalise on an early bid at the index level, with gains fading into the close, leaving the benchmark CSI 300 -0.1%.

• Chinese industrial profits data was flagged as a limiting factor, as the broader space once again failed to extend on the post-Politburo rally.
• Still, it wasn’t a case of complete weakness on Thursday, as a notable rally in Chinese EV maker XPeng (based on Volkswagen investment) left the Hang Seng Tech Index within touching distance of technical bull market (defined as a 20% rally from the late May lows, based on closing prices). Elsewhere, Bloomberg’s gauge of Chinese property developer equities extended on the post-Politburo bid, briefly showing through its mid-June peak that came on the back of stimulus hopes, before fading from best levels (the index is still the best part of 20% lower YtD).
• The northbound legs of the Hong Kong-China Stock Connect schemes generated relatively limited net inflows into mainland equities on Thursday (CNY3.747bn), with international investors seemingly awaiting deeper details re: economic support measures after the initial, sizable capital deployment witnessed on Tuesday.