China stocks slipped as the nation’s producer price index fell further into deflation, underscoring how the trade war with the US continues to be a drag on growth of the world’s second largest economy. In Hong Kong, the Hang Seng Index eked out the teeniest of gains, as uncertainty about a resolution to end the three-month long protests continues to sideline investors. The Hang Seng closed at 26,683.68, higher by less than 0.1 per cent. The jewellery and watch making sector was the top losing industry in Hong Kong, with an average drop of 1.1 per cent among the 28 stocks tracked on both the main and GEM boards. Jewellery retailer Chow Tai Fook fell 2.2 per cent to HK$6.79. Oriental Watch finished down 2.9 per cent at HK$1.65. The drop followed news that August visitor numbers to the city were down nearly 40 per cent from a year ago, which is second biggest year-on-year decline since May 2003 when the deadly Sars epidemic pushed visitor numbers down by 70 per cent. The Shanghai Composite Index finished down 0.1 per cent at 3,021.2, while the CSI 300, which tracks blue chips listed on the Shenzhen and Shanghai bourses, closed down 0.3 per cent at 3959.27. Both indexes ended their previous six straight sessions of gains. Data from the National Bureau of Statistics on Tuesday morning showed that the producer price index (PPI), reflecting the prices that factories charge wholesalers for their products, fell 0.8 per cent in August. In July, the PPI fell into negative territory, at minus 0.3 per cent compared to a year ago, and down from the flat reading in June. However, Linus Yip, chief strategist at First Shanghai Securities, said despite the lacklustre data, there has been a surge of both domestic and foreign capital buying of A shares recently, boding well for Chinese equity performance over the near term. Citigroup says cuts in Fed rates, global recession risks could propel gold above US$2,000 Also “given the latest round of reserve requirement ratio cut (RRR) by the Chinese central banks, and a general expectation for more accommodative stance by the central banks in Europe and the US, I believe that the Shanghai Composite Index could still have room to go up to the 3,200 level,” said Yip, referring to the ECB and the Federal Reserve upcoming meetings this and next week, respectively. Selective tech stocks and financials led the indexes lower. China National Software & Service fell 8.5 per cent to 84.24 yuan, while Foxconn Industrial internet was down 1.7 per cent at 15.1 yuan. Ping An Insurance fell 1.1 per cent to 89.44 yuan, China Merchants Bank lost 1.4 per cent to 35 yuan, while Citic Securities was down 0.5 per cent at 24.2 yuan. Hong Kong protests and US trade war no longer China’s top priorities as spiralling pork prices dominate agenda But limiting the losses was China United Network Communications, up 5.7 per cent at 6.69 yuan. Its Hong Kong-listed subsidiary China Unicom also rose, closing up 5 per cent at HK$8.44. China Mobile rose 0.3 per cent at HK$66.2. Telecom stocks helped keep the Hang Seng afloat. China Telecom was the top gainer in the Hang Seng China Enterprises index, up 4.7 per cent to HK$3.76. The H share index ended 0.1 per cent lower, at 10,403.34. The gains in China Telecom and China Unicom came after an announcement Monday that they will cooperate to build a nationwide 5G network. Analysts expect the collaboration to result in savings in capital expenditure for the two operators. Brokerage Jefferies raised price target of China Unicom to HK$23.86 from HK$20.38 after the announcement. “Given the solid A share performance, this should lend support to the Hang Seng Index, with many constituents being Chinese companies with China onshore operations,” said Yip. Clipping gains in the index were heavyweights Ping An Insurance, down 1.6 per cent at HK$92.1, and Tencent, which finished down 0.6 per cent at HK$340.2. Meanwhile, the world’s largest pork producer WH Group fell 1.3 per cent to HK$6.78. China has granted export licences to 25 Brazilian meatpacking plants Thursday, Reuters reported, citing Brazil’s agriculture Ministry.