Chinese stocks took a dip on Wednesday following the release of the US inflation report, which indicated a reduced likelihood of a Federal Reserve rate cut and prompted investors to tread carefully.
In Hong Kong, stocks edged slightly lower by less than 0.1% to 17,082.11, ending a three-day streak of gains. The Hang Seng Tech Index, however, rose by 0.4%, with JD.com gaining 0.3% after announcing a share buyback of up to $3 billion over the next three years.
The Shanghai Composite Index fell by 0.4% to 3,043.83, while the Shenzhen market also experienced a 0.3% decline.
The US inflation report dampened investor sentiment, showing that consumers paid slightly higher prices in February than expected. This development made it less likely that the Federal Reserve would implement long-anticipated interest rate cuts at its upcoming meeting next week.
Chinese state-owned banks are reportedly considering raising up to 80 billion yuan ($11.2 billion) in syndicated loans to help the property developer China Vanke meet its upcoming repayment deadlines. Vanke, the nation’s second-largest developer by market value, is facing financial challenges similar to Evergrande and Country Garden, both of which have already defaulted on their debts. Moody’s downgraded Vanke’s credit rating to “junk” status on Monday.
Vanke’s stock initially surged on news of potential financial support but experienced a 3.7% pullback on Wednesday. On Tuesday, its shares in Hong Kong closed 10.3% higher, while its Shenzhen-listed stock ended the day with a 5.7% increase.
In the metal market, China’s central bank continued its robust gold-buying activities amid global geopolitical tensions and safe-haven demand, driving up gold prices. Official data showed that China’s gold reserves increased for the 16th consecutive month, reaching 72.58 million ounces by the end of February, a month-on-month increase of 390,000 ounces.
Gold prices retreated on Wednesday after reaching a fresh record high on Monday, when investors flocked to buy stocks of gold producers and jewelers, further boosting their prices.
Chow Tai Fook Jewellery Group saw a 0.6% increase on Wednesday following a 4.6% surge last week that pushed the stock to all-time highs. Zijin Mining Group, China’s largest gold producer by market value, rose by 2.3% in Shanghai and 3.5% in Hong Kong.
In other news, Chinese smartphone maker Xiaomi was down by 0.1% after announcing on Tuesday that it would unveil its first electric vehicle on March 28. Cathay Pacific Airways’ stock jumped by 5.3% after announcing a remarkable 336% increase in operating profit in 2023, reaching 15.1 billion Hong Kong dollars ($1.9 billion) and surpassing the previous record set in 2010.
In the bond market, China’s Ministry of Finance issued the year’s first batch of renminbi-denominated treasury bonds on Wednesday in Hong Kong, with a scale of 12 billion yuan ($1.7 billion). This marks the 16th consecutive year that the Ministry of Finance has issued Renminbi sovereign bonds in Hong Kong, with the total issuance size surpassing 300 billion yuan ($41 billion).
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