Mainland Falters On Property Worries, HK Outperforms

A soft end to the week for mainland Chinese equities, with property sector fragilities outweighing any bullish impetus stemming from the PBoC’s RRR cut, a net liquidity injection via the PBoC’s monthly MLF operation and a better-than-expected round of Chinese monthly economic activity data.

• The CSI 300 finished 0.6% lower, a little off session lows.
• In terms of developer specifics, credit matters were once again at the fore as Sino-Ocean suspended all offshore debt payments and Country Garden further delayed a bond extension vote until Monday.
• Offshore investors were net sellers of mainland equities via the HK-China Stock Connect (~CNY2.5bn), registering outflows from the mainland for the fourth consecutive session.
• HK equities fared better, with the Hang Seng adding 0.8%, although the benchmark pulled back from best levels as mainland equities faltered.
• A firmer U.S. equity backdrop helped the HSI, while the positive factors out of China were also eyed until the late pullback.
• Many remain focused on the wide A/H premium index as a potential source of relative support for H shares.