Hong Kong stocks in longest losing streak in three weeks as China deflationary data stokes recovery concerns

Consumer prices fell 0.2 per cent from a year earlier in October and producer prices dropped 2.6 per cent – both data points were worse than market expectations

Country Garden’s shares slid after Ping An Insurance denied a Reuters report citing sources that Beijing has asked it to take over the property developer

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A customer shops at a supermarket in Nanjing, in China’s eastern Jiangsu province on October 13, 2023. Photo: AFP

Published: 10:34am, 9 Nov 2023Updated: 4:38pm, 9 Nov 2023

Hong Kong stocks fell for a third day, posting the longest losing streak in three weeks, after a government report showed both consumer and producer prices slipped last month, sparking worries about weak domestic demand in the world’s second largest economy.

The Hang Seng Index dropped 0.3 per cent to 17,511.29 at close, capping a three-day spell of falls when it posted an aggregate loss of 2.5 per cent. The Hang Seng Tech Index added 0.1 per cent and the Shanghai Composite Index rose less than 0.1 per cent.

Tencent slipped 0.5 per cent to HK$306.80 and Alibaba Group shed 0.4 per cent to HK$82.15. Ping An Insurance’s shares retreated 1.3 per cent to HK$38 after the insurer denied a Reuters report, which cited sources, that Beijing has asked it to take over property developer Country Garden Holdings and assume its mountain of debt. Country Garden, which is no longer a constituent of the Hang Seng Index, sank 9.6 per cent to HK$0.75 and its affiliate Country Garden Services slumped 7.6 per cent to HK$7.16.

Consumer prices fell 0.2 per cent from a year earlier in October and producer prices dropped 2.6 per cent for a 13th straight month of decline, the statistics bureau said on Thursday. That compares with the consensus estimates of a 0.1 per cent drop and a 2.7 per cent decline, respectively.

“The data shows combating persistent disinflation and weak demand remains a challenge for Chinse policymakers,” said Bruce Pang, chief economist a Jones Lang LaSalle in Hong Kong. “An appropriate policy mix and more supportive measures are needed to prevent the economy from a downward drift on inflation expectations that could threaten business confidence and household spending.”

The worse than expected inflation data sparked concerns about the strength of China’s economic recovery. Exports contracted by more than estimated last month and manufacturing data unexpectedly shrank, surprising markets after China’s economy grew at a faster-than-expected clip in the third quarter. The Hang Seng Index has fallen 11 per cent this year for the worst performance among the major benchmarks globally.

Chinese chip maker Semiconductor Manufacturing International Corp slid 2.1 per cent to HK$23.40 before its earnings result later on Thursday. Third-quarter profit probably fell 62 per cent from a year earlier, according to the consensus estimate of the analysts tracked by Bloomberg.