Mixed Fortunes For Mainland & HK Benchmarks Ahead Of LNY

Divergent performance for the HK & mainland benchmarks today, with the Hang Seng shedding 1.3% and the CSI 300 +0.6%.

• The CSI 300 has added the best part of 6% since Friday’s close, with policy support (both delivered and expected) and a personnel change at the top of the CSRC factoring into the rally at different stages this week.
• A softer-than-expected mainland CPI print would have aided sentiment, while the proximity to the LNY holiday period (mainland markets are now closed until 19 Feb) will have impacted positioning and volume.
• A buoyant round of trade for most property developers also helped, with the latest easing of house purchase restrictions in the city of Shenzhen and continued policymaker focus surrounding financing channels for the sector likely factoring in.
• We also note that most brokerage names moved higher, presumably benefitting from the rejig at the top of the CSRC.
• Post-earnings weakness for tech giant Alibaba helped the HK benchmark lower.
• Comments from Chinese President Xi (made after the mainland equity close) had no meaningful impact on USD/CNH, nor on late Hong Kong equity trade (at least when looking at the Hang Seng index). Xi underscored the need to enhance the economic rebound in China, while vowing to enhance economic vitality alongside a comprehensive deepening of reforms. All in all, Xi seems to have deployed familiar phrases/gone over well-known focus areas, but market participants remain on the lookout for more tangible action.
• The HK-China Stock Connect links generated marginal net buying of mainland equities (CNY583mn), with the run of consecutive net daily purchases now stretching over 8 sessions.
• Volatile trading conditions are expected to remain present after the LNY break, with participants hopeful re: further policymaker support (in both macro and stock-specific forms).