Lacklustre Mainland Return From NY Holiday

MNI (London) - Mainland equity benchmarks firmed into the close, with the CSI 300 going out at best levels as it added ~1.2%.

• Some mid and small cap ETF flow pointed to the ‘National Team’ putting money to work.
• CSI 300 ETF-linked inflow was more modest in relative terms but picked up in the afternoon.
• Still, many saw Monday’s move higher as a lacklustre response to indications of strong headline NY holiday economic activity, with talk of pent-up demand owing to ZCS and ongoing economic headwinds in China seemingly limiting optimism.
• Also, per-capita holiday spending was seemingly still lower than pre-COVID levels.
• The Hang Seng trimmed last week’s post-LNY gains as a result, shedding 1.1%.
• International flows helped temper gains, with CNY6.4bn net sales of mainland shares via the HK-China Stock Connect links. That broke the pre-LNY streak of 8 days of net buying.
• Supportive policymaker rhetoric remains evident, with participants eager for Beijing to do more:
• Premier Li stressed the need to deploy “pragmatic and forceful” action re: boosting economic confidence.
• Meanwhile, the CSRC vowed to proactively roll out policy that will boost confidence and expectations.
• Newswires also pointed to similar pledges on the part of local governments.
• More granularly, travel-related names benefitted from the headline NY numbers, while AI-linked names benefitted from the unveiling of Open AI’s new system.
• Brokerages struggled after various penalties were levied post-change of CSRC Chair.