Lower After Xi-Biden Summit & Soft House Price Data, Offshore Selling Resumes

MNI (London) - The CSI 300 shed 1.0% on Thursday, while the Hang Seng lost 1.4%.

• The Xi-Biden summit saw progress on curbing fentanyl risks and improving military communication. Not much headway was made re: economic matters, but expectations were limited on that front. Some of Biden’s language was still stern.
• Some attributed at least part of the equity weakness to modest/limited progress in Sino-U.S. relations.
• Fentanyl producers continued to struggle given the Sino-U.S. progress on that front.
• Speculation surrounding relatively imminent PBoC RRR cuts continued to do the rounds via local media, despite Wednesday’s sizable liquidity injection via PBoC MLF and OMOs on Thursday (facilitating the smooth takedown of increased bound issuance and relieving any credit strains is the aim of these liquidity injections).
• Chinese house prices saw the steepest M/M drop since 2015 in October. The weakness broadened and was evident in most of the major cities. This will have fed into the broader weakness in equities, Comments re: the potential for a gradual stabilisation of the real estate market did the rounds in the local press but did little for property developers.
• China Huarong surged after an agreement to buy a stake in Citic. The company’s HK listing added ~30%, before fading from best levels to add ~12% on the day.
• Concerns surrounding Tencent’s revenue post-earnings seemed to negate the early bid linked to beats in the company’s quarterly profit metrics.
• Filings pointed to large fund managers adding pharmaceutical and new energy names in Q4.
• Offshore participants reverted to net selling of mainland equities via the HK-China Stock Connect schemes (CNY2.2bn) after Wednesday broke a streak of 6 days of net sales.