Hong Kong stocks snap six-day winning streak as weak China inflation reports undermine recovery bets

Stock benchmark slips from a five-week high as bullish China bets take a knock following weak reports on producer, consumer prices in China
Market is still on course for a 2.1 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

Why you can trust SCMP

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, losing 2.1 per cent to 17,852.85 at the local noon trading break. The index was still headed for a 2.1 per cent gain in week, courtesy of rally in the preceding six days. The Tech Index slumped 3.2 per cent and the Shanghai Composite Index retreated 0.6 per cent.

Alibaba Group retreated 3.4 per cent to HK$82.90 and rival e-commerce platform operator JD.com slumped 12 per cent to HK$103.50. Jewellery retailer Chow Tai Fook lost 5.2 per cent to HK$10.96 while Meituan slipped 3.9 per cent to HK$113.80. Search engine operator Baidu sank 5.2 per cent to HK$124.70.

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 Jones Lang LaSalle in Hong Kong. “Fiscal policies need to be ramped up to make up for inadequate aggregate social demand.”

China’s sovereign fund raises stake in Big Four banks in boost to stock market

Elsewhere, China’s Big Four lenders retreated, surrendering some of their big gains overnight. Several incremental market purchases in the bank 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 them, dropped 1 per cent to HK$3.88, while Construction Bank slipped 0.6 per cent to HK$4.66. Bank of China lost 0.7 per cent to HK$2.83 and the Agricultural Bank of China also declined 0.7 per cent to HK$2.99.

One stock started trading on Friday. Inner Mongolia Chevalese Dairy Group dropped 11 per cent to 4.45 yuan in Beijing.

Other major Asian markets weakened. South Korea’s Kospi retreated 1 per cent and Australia’s S&P/ASX 200 lost 0.4 per cent, while Japan’s Nikkei 225 slipped 0.4 per cent.