Chinese stocks slide as investors maintain caution after US inflation report

HONG KONG (AP): China stocks were lower Wednesday after the overnight United States inflation report that signaled a diminished possibility of the Fed’s rate cut made investors cautious.

Hong Kong stocks edged less than 0.1% lower at 17,082.11, ending its three consecutive days of gain. Hang Seng Tech Index advanced 0.4%, with JD.com gaining 0.3% after the company announced a share buyback of as much as $3 billion over the next three years.

The Shanghai Composite Index dropped 0.4% to 3,043.83, and the smaller market in Shenzhen also shed 0.3%.

The overnight report on U.S. inflation subdued investor optimism, with the data showing that consumers paid prices in February that were a bit higher than expected, making it less likely that the Federal Reserve could deliver long-sought cuts to interest rates at its meeting next week.

China’s local media reported Tuesday that the country’s state-owned banks may raise up to 80 billion yuan ($11.2 billion) in syndicated loans to assist the property developer China Vanke in meeting its impending repayment deadlines.

Vanke was the second-largest developer in the nation based on market value, and has followed the path of Evergrande and Country Garden, both of which have already defaulted on their debts. In January, a Hong Kong court ordered Evergrande to undergo liquidation following a failed effort to restructure $300 billion owed to banks and bondholders.

The rating agency Moody downgraded Vanke’s credit rating to “junk” status on Monday.

Vanke stocks surged after the news of the potential financial support while experiencing a 3.7% pullback Wednesday. On Tuesday, its shares listed in Hong Kong closed 10.3% higher, and the stock traded in Shenzhen ended the day with a 5.7% increase.

In metal trading, China central bank continued to exhibit robust gold-buying activities amid global geopolitical tensions and haven demand, which further drove up the price of gold. Official data showed that China’s gold reserves increased for a 16th-consecutive month, with gold reserves reaching 72.58 million ounces by the end of February, representing a month-on-month increase of 390,000 ounces.

Gold retreated Wednesday after reaching a fresh record high Monday, when investors flocked to buy stocks of gold producers and jewelers, further boosting the stock prices.

Chow Tai Fook Jewellery Group saw a 0.6% increase Wednesday following last week’s 4.6% surge that pushed the stock to all-time highs. Zijin Mining Group, China’s biggest gold producer by market value, rose 2.3% in Shanghai and 3.5% in Hong Kong.

Elsewhere, Chinese smartphone maker Xiaomi was down 0.1% after it announced Tuesday that it will deliver its first electric vehicle on March 28. Cathay Pacific Airways stock jumped 5.3% after it announced remarkable a 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 Wednesday in Hong Kong with the scale of 12 billion yuan ($1.7 billion). This is 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).