HONG KONG: Hong Kong stocks dropped Wednesday morning, poised to extend their previous losses, after China’s producer prices declined for 43rd consecutive month in September, signalling persistent deflation risks, and consumer inflation came in below forecasts.
The Hang Seng Index fell 0.6 per cent to 22,470.84, with the China Enterprises Index, which tracks Hong Kong listed Chinese companies, off by 0.5 per cent to 10,391.08. Hong Kong stocks settled modestly lower on Monday with a 0.6 per cent loss.
Mainland Chinese markets traded mixed. The Shanghai Composite Index reversed earlier losses after a choppy morning session, ticking up 0.1 per cent by noon at 3,295.20. The index had risen for five days in a row by Tuesday. The large-cap CSI300 Index also inched up 0.1 per cent to 3,446.83. However, the Shenzhen Composite Index nudged lower by less than 0.1 per cent to 1,906.42, and the Nasdaq-style ChiNext Index dropped 0.4 per cent to 2,333.21.
China’s producer price index (PPI) dropped 5.9 per cent in September, in line with market forecasts, marking the 43rd straight month of declines, according to official data released earlier Wednesday. The PPI remained unchanged from August.
Meanwhile, the consumer-price index rose 1.6 per cent in September, below an estimated 1.8 per cent increase by Reuters and The Wall Street Journal separately, compared with a 2 per cent increase in August.
“Today’s data point to persistent deflation pressures in China’s economy, “ said Jing Li, Greater China Economist for HSBC, in a research note on Wednesday.
Concerns for deflationary pressures have caused some fluctuations in the stock markets in the morning session, impacting some specific sectors such as retailers, said Gerry Alfonso, an analyst for Shanghai-based Shenwan Hongyuan Securities.
Among market movers, Chinese shoe retailer Belle International Holdings fell 2.5 per cent in Hong Kong, and top food and beverage producer Want Want China dropped 0.8 per cent.
Zoomlion Heavy Industry Science & Technology, one of China’s largest construction equipment manufacturers, tumbled 4.4 per cent in Hong Kong, after the company issued a profit warning for the third quarter, citing the weakness of the yuan. It expected a net loss of 190 to 290 billion yuan in the July-to-September period, compared with a net profit of more than 100 million yuan in the same period a year earlier.
Turnover for the main board in Hong Kong reached HK$41 billion by mid-session, while approximately 187 billion yuan changed hands in Shanghai markets.
