Light Uptick For CSI 300 On State Support & Sino-U.S. Talks

Sino-U.S. talks via the China Economic Working Group helped buoy mainland sentiment on Tuesday, although the move away from Monday’s fresh multi-year lows wasn’t particularly forceful, with the CSI 300 +0.4% at the close. HK’s HSI was ~1.1% lower, playing catch up as participants returned from the long weekend.

• Monday’s news of Chinese sovereign wealth fund buying/plans for further purchases of ETFs will have filtered into wider price action.
• On the state buying front, the Securities Daily covered comments from an analyst which stressed that further careful research is needed on whether China should introduce a formal stabilisation fund to shore up its stock market.
• Some outperformance for the CSI 300 property sub-index will have been welcomed by bulls, although strong headwinds for the sector remain evident and the sun-index operates just off recent multi-year lows.
• Elsewhere, the latest batch of mainland reports re: some SOEs trying to boost their listed units’ share prices via buybacks/other measures were noted.
• Speculation re: early allocation of ’24 local government bond issuance quotas continues to do the rounds, with that well-used leg of economic support seemingly on the agenda once again.
• Rare earth-related names benefitted from some sector-specific news re: Malaysian export bans.
• China Mobile and ZTE struggled post-earnings.
• HK property developers struggled after some names were subjected to a brokerage downgrade at JPM.
• Despite the rally, mainland equities saw another net outflow via the HK-China Stock connect links, with CNY5bn of net selling observed via those channels.