China's Weak Consumer Inflation Highlights Broader Economic Malaise

Li Chen
10 Jul, 2024
Hong Kong

Stocks traded volatile in Shanghai and Hong Kong after sluggish inflation data signaled weak consumer demand. 

The Hang Seng index and the CSI 300 index declined as much as 0.5% after rallying in the morning hours in the hopes of additional market-supportive measures from policymakers. 

Consumer price inflation slowed to an annual pace of 0.2% in June from 0.3% in May, the National Bureau of Statistics reported on Wednesday. 

Consumer prices rose for the fifth month in a row, but the price increase slowed, suggesting weak consumer demand amid job market uncertainty and a protracted property market slump. 

Core consumer price inflation, which excludes food and energy prices, rose 0.6% from a year earlier. 

Consumer price inflation has stayed near zero since April last year, the longest period of deflation since the 2009 global financial crisis. 

Annual inflation is expected to hover between 0.5% and 0.6%, sharply lower than the 3.0% target set by the central government's policymakers. 

Producer prices declined 0.8% in June, and the measure of wholesale prices eased for the 21st month in a row as factory order growth remained weak, the statistical agency said in a separate report released on Wednesday. 

 

China Stock Movers 

The Hang Seng index decreased 0.05% to 17,516.64, and the CSI 300 index declined 0.2% to 3,432.29. 

Baidu jumped 11.4% to HK$96.35, and the company's driverless robotaxi won early popularity in Wuhan, Hubei. 

Additionally, Beijing city authorities are likely to permit the use of robots in ride-sharing services in the near future. 

Nongfu Spring soared 4% to HK $35.10 on a report suggesting that the founder, Zhong Shanshan, is looking to increase his stake in the company by purchasing HK $2 billion or $256 million worth of stocks over the next six months. 

Nongfu Spring is one of the largest bottled-water companies in China, and in the previous full-year, the company posted revenue of 42.6 billion yuan and net income of 12 billion yuan. 

Four companies started trading on Hong Kong and mainland exchanges today. 

Ruichang International, a maker of petroleum refining equipment, priced its initial public offering at HK $1.36 per share and raised HK $131.6 million. 

Chenqi Technology priced its initial public offering at HK $35 per share and raised HK $1.01 billion, but the stock dropped as much as 15% in early trading. 

Shanghai Voicecomm, the developer of conversational artificial intelligence technology, raised HK $572 million in its initial public offering and priced its stock at HK $152 per share. 

Jirfine Intelligence Equipment soared to 57.30 yuan; the maker of CNC machines listed its stock at 26.50 yuan per share on the Shenzhen Stock Exchange and raised 800 million yuan.