Hong Kong stocks snap 6-day winning streak as weak China inflation undermines recovery bets

Stock benchmark slips from a five-week high as bullish bets take a knock following weaker producer, consumer prices in China
Market caps a 0.2 per cent gain for the week, courtesy of a rally in the preceding six days amid speculation on state-fund buying

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 10:42am, 13 Oct 2023

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Hong Kong stocks tumbled after official reports showed producer and consumer prices in mainland China trailed market expectations, reigniting concerns about the nation’s economic rebound. China’s four biggest lenders retreated.

The Hang Seng Index declined from a five-week high, closing 2.3 per cent lower at 17,813.45. The index rose 0.2 per cent for the week, courtesy of rally in the preceding six days. The Tech Index slumped 3.5 per cent and the Shanghai Composite Index retreated 0.6 per cent.

Alibaba Group dropped 3.8 per cent to HK$82.60 and rival e-commerce platform operator JD.com slumped 11 per cent to HK$104.20. Jewellery retailer Chow Tai Fook lost 5.5 per cent to HK$10.92 while Meituan slipped 3.2 per cent to HK$114.60. Search engine operator Baidu sank 5.3 per cent to HK$124.60.

Producer prices in mainland China dropped 2.5 per cent in September from a year earlier, capping a 12-month slide, the statistics bureau said on Friday. Economists had predicted a 2.4 per cent decline, versus a 3 per cent deflation in August. A separate report showed consumer prices were flat, versus consensus forecasts for a 0.2 per cent increase.

“Inflation may still see some weakness going forward because of base effect and external uncertainty,” said Bruce Pang, chief economist at JLL in Hong Kong. “Fiscal policies need to be ramped up to make up for inadequate aggregate social demand.”

Elsewhere, China’s Big Four lenders surrendered some of their gains from the previous day. Several incremental market purchases in the banks’ stocks by the nation’s US$1.35 trillion sovereign wealth fund on Wednesday had fuelled talks Beijing is intervening to shore up confidence in the market.

ICBC, the largest of the Big Four, dropped 1.8 per cent to HK$3.85, while Construction Bank slipped 1.1 per cent to HK$4.64. Bank of China lost 1.4 per cent to HK$2.81 and Agricultural Bank of China eased 1.3 per cent to HK$2.97.

One stock started trading on Friday. Inner Mongolia Chevalese Dairy Group fell 5.2 per cent to 4.74 yuan in Beijing.

Other major Asian markets weakened. South Korea’s Kospi retreated 1 per cent, while Australia’s S&P/ASX 200 and Japan’s Nikkei 225 both slipped 0.6 per cent.