Mixed Performance, Evergrande Liquidation Order Knocks Space Off Best Levels

MNI (London) - Benchmark indices finished shy of best levels on Monday.

• The CSI 300 shed 0.9%, while the Hang Seng was 0.8% firmer.
• That came after a fade/reversal of the initial support derived from the CSRC’s announcement re: fully suspending the lending of restricted shares, as it looks to shore up the troubled equity market.
• The pressure came on news that embattled developer Evergrande and its creditors were unable come to a restructuring agreement, resulting in HK courts ordering the liquidation of the company.
• Lingering worry surrounding potential U.S. action vs. Chinese AI & biotechnology names was also flagged.
• There was some counter on that front, with U.S. National Security Advisor Sullivan and China’s Foreign Minister Wang Yi discussing a call between the two countries’ Presidents, per wire source reports. The reports suggested this call could come as soon as the Spring.
• There were also suggestions that a Sino-U.S. call on fentanyl will be held next week.
• News that the city of Guangzhou has relaxed home purchase limits for buyers with local residency helped support the property sector before the Evergrande news weighed.
• Major news outlets flagged comments from analysts pointing to the potential for deeper easing re: property markets in the large cities, along with lower mortgage rates.
• Elsewhere, local wires noted that China will guide listed SOEs to focus on market performance/valuation, with an eye on better rewards for investors (another layer of policymaker support for the broader market).
• Participants and brokerages seem to expect further market-supportive measures.
• We also saw reports of a potential merger of three of the country’s largest bad debt managers under China’s sovereign wealth fund umbrella.
• Net flows re: the mainland via the HK-China Stocks Connect scheme were essentially neutral (CNY0.6bn of net selling).