RRR Cut Facilitates Bid, H-Share Discount To Mainland Equivalents Narrows From 15-Year Wides

MNI (London) - The earlier- and larger-than-expected RRR cut from the PBoC boosted Chinese equity sentiment on Thursday, although questions continued to do the rounds re: the efficacy of the latest liquidity injection given worry surrounding the demand side of the economic equation. That kept discussions surrounding the next stage of stimulatory measures front and centre.

• The CSI 300 finished 2.0% better off, with the Hang Seng adding a similar amount. The latter has retaken the 16,000 mark, recovering from Monday’s showing below 15,000.
• The Hang Seng has seen a more notable rally in the wake of this week’s delivered policy easing and speculation surrounding policymaker and regulator support for the equity market. This has allowed the discount of H-shares vs. respective A-shares to move away from ~15-Year extremes.
• Credit access for property developers remains a focal point for regulators and policymakers, with broader support on that front helping to facilitate a bid for related equity names on Thursday.
• Looking a little deeper, SOEs benefitted from a particular focus on injecting higher quality assets into the space.
• Earnings-/guidance-related positives were seen in several names.
• Coal names benefited from policymaker focus on the quickening of the development of Shanxi-based coal projects.
• The HK-China Stock Connect links generated ~CNY6.3bn of net mainland inflows via the northbound channels, representing the largest round of daily net purchases via those links since the turn of the year.