In early trading on Wednesday, Hong Kong stocks fell, leading the benchmark index to drop below the 18,000 mark for the first time in two months. This decline was attributed to weak domestic demand indicated by China’s inflation data.
The Hang Seng Index decreased by 1.5% to 17,904.81 as of 10 am local time, potentially closing below 18,000 for the first time since April 30. The Hang Seng Tech Index also slid by 1.4%, while the Shanghai Composite Index remained relatively unchanged.
China’s statistics bureau reported a 0.3% increase in consumer prices compared to a year ago, falling short of the economists’ consensus estimate of 0.4% growth. Producer prices continued to decline for the 20th consecutive month, dropping by 1.4% and reflecting weak demand conditions.
Chief economist Zhang Zhiwei from Pinpoint Asset Management in Hong Kong noted that deflationary pressure persists, suggesting a more comprehensive and proactive policy approach may be needed to boost domestic demand effectively.
Concerns about rising interest rates affecting home purchases led to the weakening of Hong Kong property developers ahead of the US Federal Reserve’s rate-setting meeting. Notably, New World Development and Wharf Real Estate Investment experienced declines.
Tencent Holdings and Alibaba Group Holding also saw slight decreases in their stock prices. The Fed is expected to maintain the benchmark borrowing cost unchanged to combat inflation, though there are concerns about potential adjustments in interest rate cut expectations for the remainder of the year.
Despite the decline in Hong Kong, other major Asian markets had mixed results. Japan’s Nikkei 225 and Australia’s S&P/ASX 200 experienced losses, while South Korea’s Kospi saw an increase. Additionally, Wuhan Dameng Database performed exceptionally well during its initial public offering in Shanghai, jumping 200% from its IPO price on the first day of trading.
