Shares in Hong Kong and Shanghai rose on Wednesday as data showing Chinese inflation easing raised hopes the mainland government will introduce economy-boosting measures. The Hang Seng Index in Hong Kong added 0.40 percent, or 92.08 points, to close at 23,140.05 on turnover of HK$62.22 billion ($8.03 billion). China's National Bureau of Statistics said the consumer price index (CPI) fell to a five-year low of 1.6 percent in September from 2.0 percent the previous month and below forecasts of 1.7 percent.
The figures are also well short of the 3.5 percent annual target set by Beijing and have raised fears of deflation in the world's number two economy. However, the news will give leaders room to stimulate growth, with data showing economic expansion is weakening. ANZ analysts attributed the sluggish price increases to the country's ongoing fight against corruption and a government austerity drive.
HSBC economist Ma Xiaoping said: "As China's deflation risk rises, policy makers should take pre-emptive measures to reduce interest rates in the real economy. Deflation is not happening now, but the risk is obviously rising. Policy makers should do more." Internet firm Tencent added 0.79 percent to end at HK$114.3, insurer AIA was up 1.33 percent at HK$41.9 and China Mobile eased 0.11 percent to HK$92.65. Cathay Pacific Airways rose 0.58 percent to HK$13.98, HSBC was unchanged at HK$78.60 and CNOOC shed 2.08 percent to HK$12.26.
In mainland China the benchmark Shanghai Composite Index rose 0.60 percent, or 14.19 points, to 2,373.67 on turnover of 171.8 billion yuan ($28.1 billion). The Shenzhen Composite Index, which tracks stocks on China's second exchange, climbed 0.41 percent, or 5.49 points, to 1,351.13 on turnover of 193.2 billion yuan. "Although there's no inflationary pressure, there are still a lot of uncertainties over the economy," Zheshang Securities analyst Zhang Yanbing told AFP. "The market fell in morning trade after the data, but gains in brokerages helped reverse the trend," he said. Brokerages ended higher across the board on strong earnings. In Shanghai, Pacific Securities surged by its 10 percent daily limit to 7.01 yuan while Sinolink Securities jumped 3.82 percent to 25.29 yuan. Defence-related firms also rose in Shanghai on hopes for asset restructuring. TONTEC Technology Investment Group soared 10 percent to 11.50 yuan while Hafei Aviation Industry advanced 2.81 percent to 40.94 yuan.