China stocks inch higher, HK muted, as inflation data highlights sector divergence

Business Recorder reported that China's stocks edged higher on Tuesday while Hong Kong shares stayed flat, as fresh producer and consumer price data pointed to an uneven economic recovery. By the lunch break the blue-chip CSI300 had risen 0.1%, the Shanghai Composite was up 0.2%, and the Hang Seng was unchanged.

Factory-gate inflation picked up in August and consumer price growth also accelerated, largely because energy costs rose on supply risks linked to the Middle East war, while domestic demand stayed weak. Non-ferrous metal smelting and processing and energy posted some of the biggest price gains, whereas household appliance prices turned negative again.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, argued that the August readings were mostly driven by commodity and food prices, so they should not be seen as proof of recovery. Coal, defense, energy and shipping shares rallied as Middle East tensions escalated and oil prices rose, while media and property stocks lagged on weak domestic demand. BofA Securities kept its 2026 growth forecast for China at 4.5% but trimmed its 2027 and 2028 projections to 4.2% and 4.0%, citing domestic headwinds and delayed policy easing.