Latest Rumours Of Pipeline State Support Do Little

The lead from the U.S. provided negative momentum for Asia-Pac stocks on Friday, with China no exception.

• The CSI 300 ended 1.1% lower, with the Hang Seng’s higher beta run maintained as it shed 2.5% (the HSCEI lost a similar amount).
• There was little lasting, tangible impact from the BBG sources report which suggested that “China is considering forming a state-backed stabilization fund to shore up confidence in its $9.5 trillion stock market, according to people familiar with the matter.”
• This came swiftly after Wednesday’s news re: the Chinese sovereign wealth fund lifting its exposure to big four bank equities (with an eye on doing more), with bulls eager for proof of more state-backed support, given the well documented Chinese economic headwinds.
• Softer than expected domestic inflation metrics also did little, given readthrough for domestic demand.
• Flow wise, net sales were seen across the HK-China Stock Connect schemes, essentially reversing Wednesday’s round of net purchases (net sales of CNY6.4bn were seen via those channels).
• After mainland markets closed, we saw firmer than expected aggregate financing data out of China, alongside softer than expected money supply and new loans prints.
• Meanwhile, ongoing PBoC communique has provided familiar soundbites.