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CHINA STOCKS
It was another volatile trading session for Chinese equities, with multiple rounds of headlines providing support. The CSI 300 ended 3.5% higher, while the Hang Seng added 4.0%. The HSCEI outstripped both, adding 4.9% on the day, while the major tech sub-indices added over 6.0%.
- Supportive factors included:
- China’s sovereign wealth fund vowing to increase its holdings of ETFs.
- The securities watchdog encouraging more share buybacks and increasing focus on guiding funds to increase long-term A-share holdings.
- BBG sources reporting that President Xi is set to be briefed by the Chinese regulators on financial markets, raising hopes of further, relatively imminent market-supportive/stimulus measures (the meeting could take place as soon as Tuesday, per the sources).
- Feedthrough from Monday’s after hours comments from the CSRC re: margin matters and a crackdown on illegal trading activity, as well as reports of limits surrounding total return swap and quant fund trading activity.
- This bucked the recent trend of under delivery vs. market appetite for deeper support.
- Flow wise, the latest instances of official support (outlined earlier) triggered the largest round of northbound net daily purchases via the HK-China Stock Connect links since late December (CNY12.6bn), as international participants deployed capital in the hope that the support levers will allow the CSI 300 to move away from ~5-year lows.
- This was the sixth consecutive day of net purchases of mainland equities via those links. ~CNY24.3bn of net purchases have been lodged over that timeframe.
- Note that ETF volumes were not as pronounced as what was seen in recent sessions.
- Some desks have estimated that the national team has already purchased CNY70bn+ of mainland equities in recent weeks.
- Looking a little deeper, L’Occitane befitted from M&A discussions.
- Cosmetics names benefited from spill over surrounding Estée Lauder’s earnings.
Fig. 1: Daily Net Northbound Flows Via The Hong Kong-China Stock Connect Schemes (CNY bn)
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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