Hong Kong stocks slide for third day as China holds key policy rate while housing slump persists, odds of US rate cut weaken after inflation reports

China’s central bank keeps the rate on one-year term facility unchanged at 2.5 per cent; official report shows home prices declined again in February

US producer prices rose faster than expected in February, prompting traders to trim bets on a rate cut in May

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A pedestrian uses his phone as he passes an electronic sign showing the Hang Seng Index on February 28, 2024. Photo: AFP

Published: 10:50am, 15 Mar 2024Updated: 5:15pm, 15 Mar 2024

Hong Kong stocks dropped for a third day after China’s central bank left a key policy rate unchanged despite a deepening slowdown in the housing market. Traders scaled back bets on an imminent rate cut in the US after producer prices accelerated faster than market consensus.

The Hang Seng Index slumped 1.4 per cent to 16,720.89 at the close on Friday, restraining the weekly advance to 2.3 per cent. The Tech Index slid 1.5 per cent while the Shanghai Composite Index added 0.5 per cent.

Chinese developers led losses after an official report showed slumping home prices in February, as Longfor Group tumbled 3.5 per cent to HK$10.54 and China Resources Land lost 0.8 per cent to HK$25.20.

Alibaba Group fell 2.1 per cent to HK$71.90 and Meituan declined 3.8 per cent to HK$89.40.

The People’s Bank of China kept the rate on one-year medium-term lending facility at 2.5 per cent on Friday, dashing hopes of additional monetary easing after a major liquidity injection and rate cut earlier this year to revive growth. It also withdrew 94 billion yuan (US$13 billion) of cash from the financial system.

“Authorities will likely need to implement more substantial measures in the coming months,” said Stephen Innes, managing director at SPI Asset Management. “Without a substantial increase in stimulus measures or meaningful efforts toward structural reform, the economy could face another tumultuous period similar to last year.”