China stocks retreat as steep factory price slump weighs; HK rises

Credit: REUTERS/China Stringer Network

China stocks retreated on Tuesday, snapping their week-long winning streak, after data showed country's factory-gate prices had shrunk at the sharpest pace in three years in August, reinforcing the urgency for Beijing to step up stimulus.

SSEC -0.4%, CSI300 -0.6%, HSI 0.1%

HK->Shanghai Connect daily quota used 2%, Shanghai->HK daily quota used 0.8%

FTSE China A50 -0.6%

SHANGHAI, Sept 10 (Reuters) - China stocks retreated on Tuesday, snapping their week-long winning streak, after data showed country's factory-gate prices had shrunk at the sharpest pace in three years in August, reinforcing the urgency for Beijing to step up stimulus.

** The CSI300 index .CSI300 was down 0.6% at 3,950.30 points at the end of the morning session, while the Shanghai Composite Index .SSEC slipped 0.4% to 3,013.71 points.

** Analysts say flagging demand at home and abroad is forcing some Chinese businesses to slash prices to win new orders or cut output to contain costs, chipping away at already-lean profits and further dampening business confidence.

** U.S. Treasury Secretary Steven Mnuchin on Monday said he did not see the threat of a recession as the Trump administration seeks to revive trade negotiations with China, adding that he expected a positive year ahead for the U.S. economy.

** China stocks were less sensitive to the changes in the Sino-U.S. trade situation after ups and downs in the past, while market participants might only embrace limited optimism for the results of their October negotiations, analysts at AVIC Securities said in report.

** Besides investors could incline to book profits following a recent strong rally, even as the benchmark Shanghai index reached the key 3,000-point level, seen as a strong resistance since May when markets tumbled after Trump threatened fresh tariffs.

** In Hong Kong, the Hang Seng index .HSI added 0.1% to 26,703.58 points, while the Hong Kong China Enterprises Index .HSCE was unchanged at 10,413.89 points.

** An escalation of violence cannot solve social issues in Hong Kong, the leader of the Chinese-ruled city, Carrie Lam, said on Tuesday, adding that she deeply regretted interference by foreign parliaments in the Asian financial hub's matters.

** Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was weaker by 0.29% while Japan's Nikkei index .N225 was up 0.26%.

** The yuan CNY=CFXS was quoted at 7.1162 per U.S. dollar, 0.07% firmer than the previous close of 7.121.

** The largest percentage gainers in the main Shanghai Composite index were Harbin High-Tech Group Co Ltd 600095.SS, which gained 10.02%, followed by Kingfa Sci & Tech Co Ltd 600143.SS, gaining 10.01% and Super Telecom Co Ltd 603322.SS, up by 10.01%.

** The largest percentage losses in the Shanghai index were China National Software & Service Co Ltd 600536.SS, which dropped 8.41%, followed by Guangdong Ellington Electronics Technology Co Ltd 603328.SS, losing 5.66% and Hefei Metalforming Intelligent Manufacturing Co Ltd 603011.SS, down by 5.22%.

** So far this year, the Shanghai stock index gained 21.29%, while China's H-share index rose 2.9%. Shanghai stocks have risen 4.8% so far this month.

** The top gainers among H-shares were China Telecom Corp Ltd 0728.HK, up 3.62%, followed by CITIC Ltd 0267.HK, gaining 2.99% and China Petroleum & Chemical Corp 0386.HK, up by 2.78%.

** The three biggest H-shares percentage decliners were ANTA Sports Products Ltd 2020.HK, which has fallen 2.38%, ENN Energy Holdings Ltd 2688.HK, which has lost 2.3% and China Merchants Bank Co Ltd 3968.HK, down by 2.0%.

** As of 04:15 GMT, China's A-shares were trading at a premium of 29.67% over the Hong Kong-listed H-shares.

China stock market graphics suite http://reut.rs/1NfkoGl

(Reporting by Luoyan Liu and John Ruwitch, Editing by Sherry Jacob-Phillips)

((luoyan.liu@thomsonreuters.com; Reuters Messaging: luoyan.liu.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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