Mainland Firms, Hong Kong Struggles

Chinese equities firmed on Monday, although gains at the index level were shallow, with the CSI 300 closing off highs, +0.7%.

• Various developments supported the space:
• China's financial regulator reduced the risk weighting for insurance firm holdings of blue-chip shares and tech equities, aiming to encourage them into deploying more capital into the struggling stock market.
• A pledge from regulators re: more measures to support capital markets (Friday).
• A bid for the yuan, with particular focus on rhetoric from policymakers.
• Firmer than expected domestic credit data for August.
• Guangzhou becoming the first tier-one Chinese city to offer first time mortgage rates at sub-LPR levels.
• Modest inflows via the HK-China Stock Connect Channels (CNY2.2bn).
• Still, it wasn’t all good news. HK tech-heavy benchmarks were lower on news that a senior Alibaba executive has resigned, which weighed on sentiment, although there was a recovery from lows in the afternoon session (Hang Seng -0.5% at close).
• Hong Kong builders also struggled, with weaker earnings a particular drag.