Property Sub-Indices Lead Benchmarks Lower

The CSI 300 lost 0.7% on Wednesday, while the Hang Seng was 0.1% worse off.

• Country Garden missed a coupon payment on an onshore bond for the first time, subsequently entering a 30-day grace period re: the payment.
• The name led property sub-indices lower, with those metrics seeing larger losses than the broader benchmarks.
• Shipbuilders also struggled as the U.S. looks into Chinese subsidies for the industry.
• There was continued speculation re: the potential for further PBoC easing (RRR and MLF rate cuts) in Q2.
• This had little impact given widely held expectations for such moves after PBoC Governor Pan previously signalled a continued lowering of financing costs and RRR cuts.
• Mainland inflows via the HK-China Stock Connect links continued to moderate (~CNY1.6bn).
• Still, Wednesday saw the fourth consecutive day of net inflows via those links, even with broader benchmarks on the defensive.
• Sentiment surrounding Chinese equities has definitely improved in recent weeks, given firmer policymaker rhetoric and action.