Mainland Outperforms HK

Mainland benchmarks were higher on Thursday. CSI 300 +1.9%

• Yesterday’s headlines re: restricting direct market access schemes weighed ahead of Wednesday’s close, but forceful language from the CSRC and news that a top performing quant fund has been banned from trading stock index futures (for 1 year) provided support.
• Offshore flow also helped, with HK-China Stock Connect links seeing the largest round of net northbound inflows since Jul ’23 (CNY16.6bn)
• Outperformance for mid & small cap benchmarks suggests that participants remain attuned to broader policymaker support, viewing yesterday’s weakness as fresh buying opportunity.
• Further broad policy and equity market-specific support is expected.
• Some provinces have already released their annual investment plans ahead of schedule, with many of those areas boosting investment vs. ’23 levels.
• Life insurer allocations also drew interest, with one name set to open a CNY50bn fund geared towards high quality large cap names.
• A brokerage call re: selling into any HK Budget-driven strength in local developers meant that the HK property index was lower even as the CSI 300 property index rallied. The Hang Seng lost 0.2% on the day.
• Baidu struggled in the wake of quarterly earnings.
• Alibaba came under pressure on the back of a cut in pricing for its cloud services.
• NetEase saw mixed earnings results after hours, with revenue missing and profit metrics beating. Impact on the wider tech sector will be eyed tomorrow, given recent regulatory-related vol.