Hong Kong Market falls as China's PPI depreciates

Hong Kong share market finished session steep down on Wednesday, 9 November 2022, registering second day of falling streak, amid caution ahead of the U.S. inflation data as well as the results of the U.S. midterm elections that could signify a power shift in Washington.

Also weighing sentiments was official data showing China's factory gate prices went backwards and consumer inflation slowed, highlighting concerns about weakening demand and consumption trend and the economic outlook in the country.

At closing bell, the benchmark Hang Seng Index dropped 198.79 points, or 1.2%, to 16,358.52. The Hang Seng China Enterprises Index was down 67.85 points, or 1.21%, to 5,534.76.

Investor appetite was dampened by latest official data showing that the world's second-largest economy factory gate prices fell for the first time in nearly two years and consumer inflation slowed, highlighting concerns about weakening demand and consumption trend and the economic outlook in the country.

China's producer price index (PPI), which reflects the prices that factories charge wholesalers for products, fell by 1.3% year on year in October, down from 0.9% growth in September, the National Bureau of Statistics (NBS) said on Wednesday. China consumer price index (CPI), meanwhile, rose by 2.1% in October from a year earlier, down from 2.8% growth in September, remaining below the annual target of around 3%. China's core consumer inflation rate, excluding the volatile prices of food and energy, rose by 0.6% in October compared with a year earlier, unchanged from September.

Meanwhile, risk sentiments dented further on caution ahead of results of the U.S. midterm elections, which could affect future levels of government spending and regulation in the second half of President Joe Biden's term. Results of the U.S. midterm elections will decide whether the Democrats lose or retain congressional control halfway through President Joe Biden's term, with investors expecting Republican gains. Republicans are widely favoured to pick up the five seats they need to control the House, but control of the Senate could come down to tight races in several states. A split Congress would diminish the outlook for fiscal support measures, leading to investors to expect the Fed to sooner become less aggressive in raising interest rates.

Traders also continued to look ahead to Thursday's report on consumer price inflation. The inflation data would give clues about how much the U.S. Federal Reserve's rapid interest rate hikes are helping cool down the economy.

Among blue chips, electric-vehicle maker BYD retreated 4.6% to HK$187 and WuXi Biologics lost 4.7% to HK$44.60. Tencent Holdings declined 3.7% to HK$236.80 and Alibaba Group slipped 1.6% to HK$66.

Shares of Property developers surged after Beijing unveiled further support for the industry. Country Garden surged 14% to HK$1.64 and its peer Longfor rallied 4% to HK$13.94.

Many Idea Cloud Holdings, which offers integrated marketing solution services, rose 2% to HK$2 on its first day of trading in Hong Kong.

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