Lower Again, Stimulus Jolts Fade Fast

MNI (London) - Benchmark Chinese and HK equity indices traded on the defensive on Thursday, with Wednesday’s negative lead from Wall St. and a narrower than expected Chinese trade surplus reading eyed (although the data internals revealed that both exports and imports weren’t quite as soft as the consensus exp.). The CSI 300 was 1.4% lower.

• Property sector worries and continued wariness surrounding the prospects for the Chinese economy (after the disappointing, short-lived ZCS bounce) leave many international participants sidelined when it comes to Chinese equities. Various sell-side notes have indicated we are back to/near pre re-opening levels when it comes to international fund exposure to China.
• Continued worry and the thirst for more support (click for more on the potential for further stimulus via our policy team’s latest interview) mean that recently outlined stimulus measures have done little to provide a meaningful boost for the broader equity space, with the CSI 300 now a little over 60 points off YtD lows.
• Thursday saw outflows from mainland shares via the HK-China Stock Connect channels resume (CNY7.1bn of net sales registered).
• From a more structural flow perspective BBG have noted that “launches of emerging-market equity funds that exclude China have already reached a record annual high in 2023, as investor concerns grow over weak returns as well as the risks of investing in the nation.”