Hang Seng Index Plunged 2% as China Inflation Data Confirmed Slowdown Trend

Li Chen
09 Sep, 2024
Hong Kong

Stocks in Hong Kong and mainland China faced renewed selling pressure in Monday's trading after investors reviewed the latest inflation reports.

The Hang Seng index dropped nearly 2% and the mainland-focused CSI 300 index dropped more than 1% after deflation worries were compounded by weak global market sentiment. 

China's consumer price inflation rose to 0.6% in August from a year earlier, accelerating from 0.5% in July, the National Bureau of Statistics reported Monday. 

Core inflation, which excludes food and energy prices, increased 0.3% from a year ago as consumers spending retrenched amid falling property prices and a weak job market outlook. 

Producer price index, a measure of wholesale prices, declined 1.8% in August, confirming weakening price trend. according to a separate report by the statistical agency. 

The wholesale inflation measure deepened its slide from 0.8% in July, and the index dropped for the 23rd month in a row, suggesting weak demand conditions. 

Market sentiment was further weakened in Hong Kong amid U.S. rate path uncertainty after the U.S. labor market expanded at a slower pace than in the previous-year pace. 

Market sentiment was weak across Asia after the U.S. economy added about 142,000 net new jobs in August, higher than the revised 89,000 jobs in July but below the market's expectations. 

The moderating labor market conditions supported the case for a rate cut at the policy meeting next week, but policymakers have been sending mixed signals over the last four weeks. 

Investors have been hypersensitive to the U.S. interest rate direction, and the world market indexes plunged between 2% and 6% last week amid rate path uncertainty. 

Global market indexes are likely to tread water with a downward bias until the U.S. monetary policy announcement at the end of a two-day meeting on September 18. 

 

China Stock Movers 

The Hang Seng index decreased 1.9% to 17,119.54, and the mainland-focused CSI 300 index dropped 1.1% to 3,197.53. 

Tech stocks plunged more than 2% following the market weakness in Hong Kong trading. 

Alibaba Group declined 1.9% to HK $78.25, Tencent Holdings dropped 1.5% to HK $368.0, and JD.com dropped 2.9% to HK $101.30. 

Property developers accelerated the previous week's decline amid rate path uncertainty and weak interim results released last week. 

Longfor Group declined 3.7% to HK $8.27, China Resources Land dropped 4.2% to HK $19.90, China Vanke fell 3.7% to HK $3.92, and Henderson Land Development eased 1.9% to HK $23.40. 

China Renaissance Holdings plunged 66% to HK $2.48, and the boutique investment bank's stock resumed trading after more than one year of trading suspension following the arrest of its founder, Bao Fan.