Mainland China Equities Struggle On Soft Data, Hang Seng Better Supported

International investors broke their 7-day streak of net purchases of Chinese mainland equities via the northbound legs of the Hong Kong Stock Connect schemes, with the combination of a soft round of Chinese monthly economic activity data and a lack of a meaningful change of tone from Chinese policymakers the seeming drivers as they sold CNY3.4bn of mainland equities.

• The benchmark CSI 300 shed 0.5% on the day, with questions surrounding the breadth, longevity and magnitude of the Chinese post-ZCS rebound gaining further traction.
• A quick reminder that our policy team recently noted that “the Chinese economy faces potential headwinds in H2 2023 as a consumption rebound stalls and weak demand drags down manufacturing, while legacy, pre-pandemic structural challenges persist” in lieu of their discussions with economists and policy advisors (click for full story)
• The Hang Seng fared a little better, with Tencent firming ahead of its earnings release, due Wednesday. Elsewhere, we did see a surge in the Golden Dragon index in U.S. trade on Monday (+4.07%), which would have had some feedthrough. That move came as money manager Michael Burry increased holdings in Alibaba and JD.com, aiding sentiment in the tech space.