NewHong Kong stocks end lower, mainland China markets mostly flat as CPI data tilts towards deflation

After several days of muted gains mainland and Hong Kong markets paused for breath Tuesday as benchmark indices closed lower on profit taking and weaker-than-expected inflation data.

Among the biggest gainers in recent sessions, mainland banks and property developers retreated, weighing down markets on both sides of the border.

Industrial and Commercial Bank of China fell 1.5 per cent to 4.73 yuan and Agricultural Bank of China dropped 1.2 per cent to 3.29 yuan. Infrastructure giant China Communications Construction gave up 2.2 per cent to finish at 16.21 yuan.

Concerns over the China growth outlook were back in focus as monthly inflation data released ahead of the market open showed consumer prices tipping towards deflation, while producer prices remained mired in negative territory for the 44th straight month.

The October consumer price index (CPI) rose 1.3 per cent from a year earlier, compared with 1.6 per cent in September, National Bureau of Statistics (NBS) data showed on Tuesday. The producer price index (PPI) fell 5.9 per cent in October from a year earlier, equal to the 5.9 per cent decline in September.

During the weekend, China’s General Administration of Customs said October exports fell 6.9 per cent year-over-year in dollar terms, after a drop of 3.7 per cent in September. Imports in October fell by a sharper-than-expected 18.8 per cent from a year earlier, following a 20.4 per cent decline in September.

“Domestic demand is pretty weak. People are willing to spend but the corporate side is weak, especially iron ore, steel and oil sectors,” said Ivan Li, equities analyst at Tung Shing Securities.