Hong Kong stocks log weekly loss as strong China data reignites monetary tightening concerns

Hang Seng Index slipped 1.1 per cent as liquidity-sensitive technology companies like Wuxi Biologics dragged the market benchmark lower

China’s producer prices rose 4.4 per cent in March from a year earlier, the biggest increase since July 2018 and beating market consensus

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A man wearing a mask walks by the Shanghai Stock Exchange building in Pudong financial district on February 2, 2020. Photo: Reuters

Published: 11:02am, 9 Apr 2021Updated: 5:04pm, 9 Apr 2021

Hong Kong stocks retreated from a three-week high after an official report shows China’s factory-gate prices grew at the fastest pace in more than two years, reigniting concerns that policymakers will dial back ultra-loose monetary policies.

The Hang Seng Index tumbled 1.1 per cent to 28,698.80 at the close, bringing the loss in the week to 0.8 per cent. Technology companies dragged the benchmark lower, as their stretched valuations made them vulnerable to potential liquidity-tightening measures.

Wuxi Biologics, Sunny Optical Technology and Meituan slumped at least 2.1 per cent.

The Shanghai Composite Index slid 0.9 per cent and the ChiNext gauge of smaller companies slumped 1.5 per cent.

China’s producer prices rose 4.4 per cent in March from a year earlier, the biggest increase since July 2018, the statistics bureau said on Friday. That also exceeded the median estimate of a 3.6 per cent gain in a Bloomberg survey. Consumer inflation accelerated to 0.4 per cent in March.

The rosy data added to other signs that the recovery at the world’s second-largest economy has been gaining traction, increasing the odds that Beijing will put a brake on easy and cheap credit. Other media reports earlier this week also suggested that China’s central bank was hoping to temper loan growth in 2021.