China stocks fall, led by tech, as US inflation stokes Fed fears

SHANGHAI: On Thursday, China's stock market experienced a decline, mirroring a broader weakening in global markets. Technology shares suffered the most significant losses, as heightened concerns over potential higher interest rates prompted by stronger-than-anticipated US inflation data sent shockwaves through the market. By midday, both the Shanghai Composite index and the CSI300 index had slipped by 2%.

The tech-focused STAR50 Index witnessed a sharper fall, plummeting 3%, while the ChiNext Composite Index, a board specializing in startups, saw a decline of 3.4%. Lei Meng, a China equity strategist at UBS Securities, attributed the recent market pullback to a concentrated unwinding of elevated tech investments and mutual fund pressures related to break-even redemptions.

The dollar gained strength, while Wall Street stocks declined following the release of US inflation data, which revealed a sharper rise in consumer prices than expected. This data briefly rekindled speculation about the Federal Reserve potentially raising interest rates. Analysts from Commerzbank noted that the main theme overnight was the hotter-than-expected US inflation print, which reignited fears of a Fed rate hike.

As investors closely monitor China's third-quarter GDP data, set to be released on Monday, the International Monetary Fund projected a moderate slowdown in Asia's economic growth for the following year, cautioning of mounting risks stemming from the Iran war-induced energy shock, a potential correction in the AI boom, and the impact of rising global bond yields.

In Hong Kong, the Hang Seng index fell by 1.5%, with tech shares losing 2.9% of their value. Alibaba's shares in Hong Kong plummeted by 4.8%.