Modest Gains For Mainland

The CSI 300 managed modest gains, adding 0.3%, aided by the well-documented speculation surrounding the potential for deeper stimulus out of Beijing along with the potential a wider than target national fiscal deficit. Still, the move was contained at the index level, with the CSI closing off session highs.

• The Hang Seng outperformed the mainland adding 1.3%, with the HSCEI adding a similar amount.
• Infrastructure and property names were the main beneficiaries of the stimulus speculation.
• Note that the latest insight piece from the MNI policy team suggested headwinds around the China economic backdrop, coupled with limited fiscal, monetary policy room, based on their conversations with economists and policy advisors.
• Banking sector focus remains evident, with the latest reports flagging that no new refinancing projects for listed banks have passed the final review since the securities regulator announced new rules to control large amounts of refinancing and restrict listed companies which fall on debut or fall below net-asset value to refinance in August.
• From a top-down level, the Securities Times reported that more private funds have built long positions in Chinese equities in anticipation that a slump in the market is close to an end, citing fund managers.
• Flow wise, mainland net flows were essentially neutral via the HK-China Stock Connect channels.