China stocks close down on deflation worries

Reuters · 05/11/2023 08:58
China stocks close down on deflation worries

Updates with stock closing prices

China stocks closed lower on Thursday, as slow consumer inflation and deepening factory gate deflation data suggested an uneven recovery and stoked deflation worries.

** China's blue-chip CSI 300 Index .CSI300 edged down 0.2% at close, while the Shanghai Composite Index .SSEC dropped 0.3%.

** Hong Kong's Hang Seng Index .HSI slipped 0.1%, and the Hang Seng China Enterprises Index .HSCE edged up 0.2%.

** China's consumer prices rose at the slowest pace in more than two years in April, while factory gate deflation deepened, data showed, suggesting that more stimulus might be to boost a patchy post-COVID economic recovery.

** "The subdued inflation readings suggest post-COVID recovery momentum continued to weaken in April," said Ting Lu, chief China economist at Nomura.

** "China will likely experience a short period of CPI deflation in the coming months," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

** The weak consumer price rise reinforces the signals from this week's trade data suggesting domestic demand remains lacklustre.

** Shares in non-ferrous metal .CSI000811 went down 1%, and artificial intelligence firms .CSI930713 dropped 1.6%. Meanwhile, energy .CSI399808 and media firms .CSI399971 jumped 1.3% and 2.1%, respectively.

** Tech giants listed in Hong Kong .HSTECH added 1.3%, with Alibaba 9988.HK up 3.1%.

** China's securities watchdog said that it was willing to work with its United States counterparts to promote audit regulator cooperation and safeguard the rights and interests of global investors.

** Chinese
extended their rise on Thursday, pushing the 10-year benchmark yield below a key threshold, as downbeat inflation data and of banks' plans to cut deposit rates fuelled bets on further monetary easing.

** Separately, sources said China has told its "big four" state-owned banks to reduce the ceiling on interest rates they pay on some deposits, as banks face squeezed margins under the weight of huge inflows of savings and deposits amid rising economic risks.

(Reporting by Shanghai Newsroom; Editing by Rashmi Aich and Janane Venkatraman)