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EQUITIES: China & Hong Kong Equities Mixed, China CPI Inline With Expectations

EQUITIES
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Chinese & Hong Kong markets are mixed today, as the market digests CPI data which highlighted worsening deflationary pressures. While Chinese policies are seen as nearing a potential bottoming-out phase, global investors remain cautious, favoring US equities. Additionally, expanding US restrictions on AI chip exports may weigh on sentiment, as they could limit access to advanced technologies crucial for China's tech sector. 

  • China's CPI slowed to 0.1% in December, marking the fourth consecutive month of deceleration and highlighting persistent deflationary pressures, with factory prices falling for the 27th month. While core CPI rose to 0.4%, the highest since July, weak price growth remains a concern for policymakers aiming to boost domestic demand and prevent a deflationary spiral.
  • Economists warn that despite government efforts like subsidies and potential monetary easing, such as rate and RRR cuts, challenges persist in shifting sentiment and sustaining growth. The subdued inflation adds urgency to Beijing's push for targeted stimulus to revive consumption and investment.
  • Overall markets are relatively subdued today with most sectors trading in narrow ranges. The HSI is 0.40% higher, the Mainland Property Index is +0.35%, while HS Tech Index is 0.50% higher. In Mainland China equities the CSI 300 is flat, CSI 300 Tech is 1% higher.
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Chinese & Hong Kong markets are mixed today, as the market digests CPI data which highlighted worsening deflationary pressures. While Chinese policies are seen as nearing a potential bottoming-out phase, global investors remain cautious, favoring US equities. Additionally, expanding US restrictions on AI chip exports may weigh on sentiment, as they could limit access to advanced technologies crucial for China's tech sector. 

  • China's CPI slowed to 0.1% in December, marking the fourth consecutive month of deceleration and highlighting persistent deflationary pressures, with factory prices falling for the 27th month. While core CPI rose to 0.4%, the highest since July, weak price growth remains a concern for policymakers aiming to boost domestic demand and prevent a deflationary spiral.
  • Economists warn that despite government efforts like subsidies and potential monetary easing, such as rate and RRR cuts, challenges persist in shifting sentiment and sustaining growth. The subdued inflation adds urgency to Beijing's push for targeted stimulus to revive consumption and investment.
  • Overall markets are relatively subdued today with most sectors trading in narrow ranges. The HSI is 0.40% higher, the Mainland Property Index is +0.35%, while HS Tech Index is 0.50% higher. In Mainland China equities the CSI 300 is flat, CSI 300 Tech is 1% higher.