Volatile End To Trade, Fresh Cycle Lows for CSI 300 Before Signs Of State Backed Buying Show Up

MNI (London) - A volatile end to the week saw the CSI 300 and Hang Seng correct off worst levels after an aggressive move lower, but the CSI 300 still finished 1.2% worse off, while the Hang Seng was 0.2% softer on the day.

• The CSI 300 registered another fresh round of intraday and closing lows for the cycle, printing at levels last seen in ’19.
• The latest leg lower didn’t come alongside anything in the way of a meaningful round of headline flow, with well-documented worry and the call for deeper economic and equity-market specific support well engrained by now (continued speculation re: further monetary easing did the rounds via local press outlets).
• Some desks pointed to continued liquidations of leveraged long positions as a trigger, with Chinese margin usage covering A shares already falling ~6.2% in the time since Jan 4 (as of yesterday’s close), per CSFC data.
• When it came to the rebound from worst levels we note that some of the favoured ETFs of the “national team” saw a surge in volume during the move away from lows, pointing to another round of state backed support.
• The property sector outperformed on the back of another uptick in PBoC PSL lending (which we flagged after hours on Thursday), while focus on some regions/cities earmarking development projects for financial support also helped.
• News that hundreds of Chinese firms forecast a notable jump in profits did little for wider sentiment.
• Looking a little more granularly, WuXi listings struggled on continued worry re: U.S. legislation against the name.
• Film-related names moved higher on the back of LNY box office sales data.
• HK-China Northbound Stock Connect links generated CNY2.4bn of net inflows for the mainland, representing a fourth straight day of modest net inflows via those links (totalling a cumulative CNY10.3bn).