China and Hong Kong shares weaken as stable growth eases stimulus bets

China and Hong Kong stocks tumbled on Tuesday, as the broader region fell, following Beijing's decision to keep key lending rates unchanged. The strong GDP data released earlier in the week raised doubts about the need for further stimulus measures. China's CSI300 Index fell 0.5% by midday, while the Shanghai Composite Index slipped 0.1%.

The CSI Banks Index and financial sector declined 1.4% due to the unchanged rates. The gold-related sector also declined 1.2% as gold prices continued their downward trend. However, the ChiNext Composite index, which tracks startup boards, rose 0.3% to recover from a 14-month low, and Shanghai's tech-focused STAR50 index increased by 0.8%.

In Hong Kong, the Hang Seng Index fell 1%, and the Hang Seng Tech Index dropped 1.2% to a two-year low. The decision by China to maintain the same lending rates for the 17th month in a row suggested that policymakers were not eager to introduce more monetary easing after the strong GDP reading. Analysts at Maybank stated that the stable growth would not prompt additional fiscal or monetary stimulus, as sluggish domestic investment and consumption would likely continue to result in slightly slower growth.

The Beijing Stock Exchange 50 Index surged more than 4% after China's securities regulator announced plans to launch an ETF tracking the index to boost the bourse's development. Asian stocks experienced a general decline on Tuesday, while oil prices rose due to geopolitical concerns ahead of significant AI bellwether company results.