China and Hong Kong shares weaken as stable growth eases stimulus bets

HONG KONG: China and Hong Kong stocks weakened on Tuesday, joining a broader retreat in the region, after Beijing kept key lending rates unchanged and stronger GDP data dampened expectations for additional stimulus.

China’s blue-chip CSI300 Index dropped 0.5% by the lunch break, while the Shanghai Composite Index was 0.1% weaker.

Dragging the broader market lower, the CSI Banks Index and the financial sector were both down 1.4%.

The gold-related sector weakened 1.2% as bullion prices continued to slip The startup board ChiNext Composite index was higher by 0.3% to recover from a 14-month low, and Shanghai’s tech-focused STAR50 index was up 0.8%.

In Hong Kong, the city’s benchmark Hang Seng was down 1%, and the Hang Seng Tech Index slid 1.2% to a two-year low.

In a sign that policymakers are in no rush to roll out further monetary easing following the strong GDP reading, China left its benchmark lending rates unchanged for the 17th straight month in October on Tuesday, in line with market expectations.

That came after China’s economy rebounded from a three-year low last quarter, expanding 4.5% and beating estimates, as robust exports offset tepid domestic demand.

The stable headline growth “lessens the urgency to unleash a new volley of fiscal and monetary stimulus”, analysts at Maybank said in a note Without additional stimulus, sluggish domestic investment and consumption will still lead to slightly slower growth, they added.

The smaller Beijing Stock Exchange 50 Index jumped more than 4% after China’s securities regulator, the CSRC, said it would launch an ETF tracking the index to support the bourse’s development.

Asian stocks retreated broadly on Tuesday while oil rose as geopolitical risks rattled sentiment ahead of key results from AI bellwether companies.