Mainland Outperforms While HK Struggles

Mainland Chinese equities outperformed on Tuesday, with the CSI 300 adding 0.6%.

• News that the Chinese sovereign wealth fund will promote risk mitigation and market stabilisation in 2024 helped bulls.
• Elsewhere, the FT provided the latest source report re: “window guidance,” noting that “since October, market regulators have been providing private instructions to some investors, which prevent them from being net sellers of equities on certain days.”
• After the close, BBG source reports pointed to policymaker considerations re: CNY1tn of ultra-long special bond issuance to support certain areas of the economy.
• This isn’t a new idea and has been covered in the mainland press in recent times (still, it could prove supportive for equities at tomorrow’s open).
• Meanwhile, the Hang Seng followed broader global trends, albeit with a higher beta, shedding 2.2% on the day. The index breached it ’23 low.
• CBBC option-related flow added to the downside in HK, per desks, as did Goldman Sachs’ expectations for mega-cap top-line earnings.
• More granularly, mainland travel-centric names once again benefitted from expectations surrounding LNY travel.
• Baidu bounced as a brokerage suggested that Monday’s market reaction re: U.S. sanctions worry was overdone.
• Names linked to elderly consumption patterns/needs benefitted from China vowing to support the “silver economy”/encourage spending surrounding the welfare of the elderly.
• China Mobile’s HK listing pushed higher on share buyback news.
• Property sub-indices struggled, with Shimao and Sunac leading losses as the names were not included in the list of developers that are eligible for funding support via Ping An Bank.
• Elsewhere, Country Garden struggled on the back of its guidance for home deliveries in ’24.
• HK-China Stock Connect links generated net outflows of CNY4.1bn on Tuesday, even as the CSI 300 advanced.