Mixed Ahead of Lunar New Year, CPI Sees Fastest Decline Since Sept 09

Final day of trading ahead of the Lunar New Year holiday, after a very eventful week with multiple headlines out supporting Chinese And Hong Kong Equities markets, equities indices have seen some wild swings particularly in the small cap space.

• Margin deployment in Chinese Equity markets continues to pull back with Wednesday marking another new low, and the lowest levels since Sep 2020. Overnight China replaced the head of its securities regulator, in a move that could be seen to further ensure the market that China will do whatever it takes to support struggling equity markets. While Wednesday trading saw flows into ETF pick up, with some channels reporting record volume, this could be on the back of announcement that the "National Team" would further increase holdings in ETFs.
• In markets on Thursday equities have opened mixed, China data was released before with CPI -0.8% YoY vs -0.5% est, Dec -0.3% (Fastest decline since Sept 2009) while PPI -2.5% YoY vs. -2.6% est, Dec -2.5%
• There hasn't been too much of a reaction to the data. Hong Kong indices are trading lower, with the HSI down 0.60% as Alibaba lead the move lower down 5.5%, meanwhile HSTech is 0.40% lower, while the Mainland property index is flat, this outperformance could be attributed to the announcement that Shenzhen has lowered the threshold for non-local homebuyers, by easing the requirement of tax and social insurance payments to three from five years.
• China Mainland equities are outperforming Hong Kong indices, led by small caps with the CSI 1000 higher by 4.2%, CS1 300 is off highs, but still trade up 0.15% for the day