China stocks flat on signs of lacklustre economic recovery

HONG KONG: China stocks were flat on Wednesday, as gains in shares of liquor giant Kweichow Moutai were partially offset by caution following data that signalled a bumpy recovery in the world’s second-largest economy.

** Hong Kong shares were trading within a narrow range as traders maintained a cautious stance ahead of the US Federal Reserve’s monetary policy decision due later in the day.

** China’s blue-chip CSI 300 Index was flat and the Shanghai Composite Index edged 0.16% higher.

** Hong Kong’s Hang Seng Index was largely unchanged.

** The factory activity in China unexpectedly contracted in October, a private survey showed on Wednesday, raising questions over the state of the country’s fragile economic recovery at the start of the fourth quarter.

** Shares of Kweichow Moutai rose 6.3% by midday after the Chinese top liquor maker announced plans to raise the ex-factory prices of its signature liquor products containing 53% alcohol by about 20% from Nov. 1, the first price hike in nearly six years.

** Gains in the index heavyweight lifted risk sentiment in the wider A-share market. The CSI food and beverage sub-index rose 2.2%.

** “The price increase is unexpected … this will not only contribute to Moutai’s forth-quarter results, but also ease some of the local debt pressure of Guizhou province - Kweichow Moutai’s hometown,” Huatai Securities analysts said in a note.

China stocks close down on contracting factory activity

** China on Tuesday announced plans to set up a mechanism for resolving local debt risks and managing government debt, after the country’s top leaders held a twice-a-decade financial policy meeting on Oct.30-31.

** On the geopolitical front, tensions between Washington and Beijing showed signs of easing.

** US President Joe Biden and his Chinese counterpart Xi Jinping are aiming to have a “constructive conversation” on the sidelines of the Asia Pacific Economic Cooperation forum in San Francisco in mid-November, the White House said.

** The broader Asian stocks inched lower on Wednesday ahead of a keenly awaited policy decision from the Fed later in the day.

** Hong Kong-listed Chinese tech firms slipped 0.3%.

** Hong Kong shares of Yum China plummeted 14% after the operator of the KFC chain in mainland China said it observed softening consumer demand in late-September until October.