Hong Kong stocks slide for third day as China holds key policy rate, odds on US rate cut weaken amid strong inflation reports

Hong Kong stocks slide for third day as China holds key policy rate, odds on US rate cut weaken amid strong inflation reports

15 Mar Hong Kong stocks slide for third day as China holds key policy rate, odds on US rate cut weaken amid strong inflation reports

Posted at 02:50h in Asia by

Hong Kong stocks dropped for a third day after China’s central bank left a key policy rate unchanged and traders scaled back bets on an imminent rate cut in the US after producer prices accelerated faster than market consensus.

The Hang Seng Index slumped 1.3 per cent to 16,743.37 at 9.59am local time, restraining the weekly advance to 2.4 per cent. The Tech Index slipped 2 per cent while the Shanghai Composite Index retreated 0.2 per cent.

Chinese property developers paced losses as Longfor Group tumbled 3.7 per cent to HK$10.52 and China Resources Land lost 2.4 per cent to HK$24.85. Alibaba Group fell 2.5 per cent to HK$71.60 and Baidu declined 2.7 per cent to HK$100.90.

The People’s Bank of China on Friday kept the rate on one-year medium-term lending facility at 2.5 per cent, dashing hopes for additional monetary easing after a major liquidity injection and rate cut earlier this year to revive growth.

Local stocks have rallied by about 13 per cent from a January low as sentiment improved on the back of China’s market intervention, helping the city’s benchmark index erase all of its losses in 2024 earlier this week. That failed to sustain, as investors worried about the persistent slowdown in the housing market. Reports this week showed some of the nation’s biggest builders, including China Vanke and Country Garden Holdings, struggled to repay their borrowings.

Country Garden to raise funds for US$13 million bond coupon within grace period

Elsewhere, China is due to release several reports on the economy’s performance in January-February. Also, some 30 Hang Seng Index members are expected to release their report cards in the coming weeks.

Stocks also fell in the region after US producer prices rose 1.6 per cent last month from a year earlier, outpacing economists’ forecasts for a 1.2 per cent increase. With almost no chance of a Federal Reserve rate cut at this month’s meeting, investors have also turned less bullish as the odds weakened for a cut in May, according to data compiled by CME Group.

Most major Asian markets fell. Japan’s Nikkei 225 slipped 0.5 per cent, while South Korea’s Kospi retreated 1 per cent and Australia’s S&P/ASX 200 lost 1.3 per cent.

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