stocks in hong kong, mainland china tumble as faster inflation undermines bets for policy easing

Stocks tumbled in Hong Kong and mainland China as accelerating inflation undermined bets among some investors for policy easing to overcome a slowdown in the Chinese economy.

The Hang Seng Index slipped 1 per cent to 24,565.86 as of 11.20am local time. The Hang Seng Tech Index retreated 0.5 per cent while China’s Shanghai Composite Index slumped 1.3 per cent.

Producer prices surged 13.5 per cent in October from a year earlier, the fastest pace in 26 years, the statistics bureau said on Wednesday. Consumer inflation quickened to 1.5 per cent, a level not seen since September 2020. Both figures exceeded the consensus projections.

Faster inflation at factory gates and retail stores is seen as limiting the room for the People’s Bank of China to ease its monetary policy to support growth and ease a credit crunch among the nation’s indebted developers. The economy has slowed over the past two quarters as a resurgence in Covid-19 cases led to stricter lockdowns and hit consumer spending.

BYD, the Chinese maker of electric vehicles, and China Mengniu Dairy were the worst performers on the city’s benchmark, falling at least 3 per cent. Sunny Optical fell 1 per cent after reporting a weak shipment in its major optoelectronic business segment.

Fantasia Holdings, the Chinese developer that has defaulted on an offshore bond, tumbled 46 per cent to HK$0.30, as the stock resumed trading after more than one month of suspension.

Tencent Holdings advanced 1.8 per cent, before the WeChat operator reports its third-quarter earnings on Wednesday. The company, which has the second-largest weight in the Hang Seng Index, is forecast to make a 0.5 per cent gain in earnings from a year earlier, according to analysts tracked by Bloomberg.

Major markets in Asia all declined, while equities in Australia struggled to hold onto gains. US stocks fell overnight, snapping their longest winning streak since 2017.

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