China stocks fall as inflation data disappoints; Hong Kong down

10 Nov, 2021

SHANGHAI: China stocks fell on Wednesday after data showed factory gate prices rose at the fastest pace in 26 years last month, reducing the chances of a policy rate cut by the central bank in the near term.

The CSI300 index fell 1.4% to 4,778.96 by the end of the morning session, while the Shanghai Composite Index lost 1.2% to 3,464.80.

The Hang Seng index dropped 1.2% to 24,520.94. The Hong Kong China Enterprises Index lost 1.1% to 8,709.28.

China stocks end higher

** China's October producer price index (PPI) climbed 13.5% from a year earlier, further squeezing profit margins for producers already grappling with soaring coal prices and other commodity costs due to a power crunch.

** "The risk of stagflation continues to rise. We are concerned about the passthrough from producer prices to consumer prices," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

** "The passthrough will likely become more visible in coming months and push up the CPI. This may limit the room of monetary policy easing by the PBoC (People's Bank of China) in 2022."

** Coal firms slumped 4%, new energy shares retreated 2.7%, and consumer staples lost 2.2%.

** Property stocks rebounded 1% after a report said some real estate companies disclosed plans to issue debt in the inter-bank market at a meeting with China's inter-bank bond market regulator.

** In Hong Kong, consumer staples and financials lost 2.5% and 1.9%, respectively, dragging down the Hang Seng Index.

** Property developer Fantasia Holdings Group Co Ltd slumped 36.7% after it said there was no guarantee it would be able to meet its financial obligations given the liquidity issue.

** Investors are awaiting cash-strapped Evergrande Group's overdue $148 million bond payment to be made on Wednesday.

** Tech giant Tencent Holdings rose 2.1% ahead of Q3 earning results later on Wednesday, making it the biggest percentage gainer on the benchmark Hang Seng Index.

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