China stocks fall on U.S. inflation data, geopolitical concerns

SHANGHAI: China stocks fell on Wednesday, tracking other Asian markets lower after U.S. inflation data came in higher than expected, while geopolitical concerns and China’s economic worries dented sentiment further.

China’s blue-chip CSI300 Index was down 0.4% at the end of the morning session, while the Shanghai Composite Index slipped 0.3%.

Hong Kong’s benchmark Hang Seng Index lost 1.3%, and the Hang Seng China Enterprises Index dropped 1.1%.

Other Asian stocks slipped, while the U.S. dollar was steadfast after U.S. CPI and remarks from central bank officials worried investors that interest rates were going to be higher for longer.

Meanwhile, a diplomatic rift between China and the U.S. deepened, with Beijing accusing Washington of flying high-altitude balloons into its airspace and that of other countries, as the U.S. military examined debris of a suspected Chinese spy balloon it downed this month.

Investors also awaited further evidence to prove an economic recovery after Beijing scrapped its strict zero-COVID policy in December.

“The market is likely to be range-bound/correct in Feb-March due to lack of meaningful data/policy execution, but (could) rise in 2Q-4Q23. Whether China utilizes some new tools to boost the economy is key,” Jefferies said in a note.

Real estate developers led Wednesday’s decline after China’s official media Economic Daily said property policy should be more precise to target real demand, and to prevent a resurgence of speculation in the market.

The CSI 300 Real Estate Index declined 2.2%, and Hong Kong’s Hang Seng Mainland Properties Index slumped 2.8%.

Shares in information technology added 1.5%, while healthcare retreated 1.2%.

Separately, China’s central bank ramped up medium-term liquidity injections as it rolled over maturing policy loans on Wednesday, while it kept the interest rate unchanged, matching market expectations.