China stocks fall on rising deflationary pressures

SHANGHAI: China stocks slipped on Monday, with the blue-chip benchmark touching a nearly five-year low, after data showed the consumer prices in the world’s second-largest economy fell the fastest in three years in November while factory-gate deflation deepened.

** The blue-chip CSI 300 Index fell 0.9%, and the Shanghai Composite Index dropped 0.6% by the midday recess.

** Hong Kong’s Hang Seng Index slumped 2%, and the Hang Seng China Enterprises Index declined 2.6%.

** Other Asian shares drifted lower ahead of a week packed with a quintet of central bank meetings and data on US inflation.

** China’s consumer price index (CPI) dropped 0.5% both from a year earlier and compared with October, indicating rising deflationary pressures as weak domestic demand casts doubt over the economic recovery.

** The country will continue to implement a proactive fiscal policy, which will be moderately strengthened, and implement a prudent monetary policy, which will be “flexible, moderate, precise, and effective”, the Politburo, a top decision-making body of the ruling Communist Party, said on Friday.

** The statement “continued to send pro-growth signals,” said Goldman Sachs in a note. “However, the discussion around high-quality growth and emphasis of ‘appropriate pace of easing’ imply policy support will likely still be measured rather than being aggressive.”

** Investors are awaiting the upcoming Central Economic Work Conference (CEWC), which will likely be held over the next few days, for more policy clues.

China stocks rise, HK slips as investors await policy signals

** Foreign investors sold a net 9.6 billion yuan ($1.34 billion) of Chinese shares via the Stock Connect so far.

** Shares in real estate and consumer staples slumped more than 2% each, while new energy firms lost 1.7%.

** Hong Kong-listed tech giants plunged 2.6%, and mainland developers listed in the city were down 3%.