Major Indices Finish A Touch Softer On Friday

Benchmark indices were a touch lower on Friday, with the CSI 300 losing 0.5% and the Hang Seng 0.7% worse off.

• Trade was volatile, with the opening move lower more than reversed at one point, before fresh weakness crept in. Both benchmarks closed above worst levels.
• It has been a torrid start to ’24 for Chinese equities, with lingering, well-defined risks more than offsetting any optimism.
• Still, the CSI 300 & HSI are yet to test their December lows.
• Local reports flagged a move to supervision from development re: local government regulatory goals surrounding the finance sector, with heightened focus on preventing/resolving financial risks.
• Quectel Wireless shares moved lower after reports pointed to the U.S. House Select Committee on China asking President Biden’s administration to bar investments in the name.
• Negative brokerage moves weighed on Yum China & XPeng.
• Data-related stocks benefitted from the government encouraging investment and IPOs in the sector.
• Mainland telecom names benefitted from expectations re: maintaining high dividend payout ratios.
• Expectations surrounding a continued lowering of deposit rates supported the banking sector via the NIM lense.
• Related names benefited from a government plan re: strengthened development surrounding new energy vehicles and charging infrastructure.
• Regulatory tweaks re: hours that firms can take investor queries were aimed at limiting abnormal stock price fluctuations during trading hours.
• After hours we received news that troubled shadow banking giant Zhongzhi has filed for bankruptcy
• The HK-China Stock Connect links saw modest net inflows for mainland equities (~CNY2bn), despite the weakness in benchmark indices.