SHANGHAI: Mainland China stocks ended lower on Wednesday, wiping out all intraday gains, due to worries over deepening factory deflation as firms cut prices amid weak demand. Hong Kong shares also fell.
At the close, the Shanghai Composite index was down 0.13% at 3,493.05 points, while the blue-chip CSI300 index was down 0.18%.
China’s producer deflation deepened to its worst level in almost two years in June as the economy grapples with uncertainty over a global trade war and subdued demand at home, piling pressure on policymakers to roll out more support measures.
“Combined with the persistently negative GDP deflator, deflation remains a concern,” said Lynn Song, chief economist for Greater China at ING.
Citi analysts said in a note that they remain “cautious on the inflation trajectory while waiting for more policy actions.”
They added that further guidance from the upcoming Politburo meeting and action plans from the state council and state planner could be worth monitoring.
On the trade front, US President Donald Trump on Tuesday said he would impose a 50% tariff on imported copper and soon introduce long-threatened levies on semiconductors and pharmaceuticals, broadening his trade war that has rattled markets worldwide.
Trump also said trade talks have been going well with the European Union and China, though he added he is only days away from sending a tariff letter to the EU.
“We have had a really good relationship with China lately, and we’re getting along with them very well. They’ve been very fair on our trade deal, honestly,” Trump said, adding that he has been speaking regularly with Chinese President Xi Jinping.
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