Deflation and Trade Tensions Hit China-HK Stocks

China and Hong Kong stock markets fell due to deflationary pressures and global trade tensions. The CSI300 and Hang Seng indices dropped amid concerns about economic growth and consumer spending. New tariffs on Canadian products were announced as trade tensions rise. Some defensive stocks gained, while tech shares lost ground.

On Monday, stock markets in China and Hong Kong took a hit as deflationary pressures and global trade tensions stirred fears about the country's economic recovery. The CSI300 Index fell 0.8% while the Shanghai Composite Index decreased by 0.6%. Hong Kong's Hang Seng Index also slipped by 2.1%.

February's consumer price index in China missed forecasts, dropping at the fastest rate in over a year. Producer price deflation continued as seasonal demand waned and spending hesitancy among households grew, driven by employment and income uncertainties. Ting Lu, chief China economist at Nomura, noted concerns about slowing economic growth due to trade tensions and a possible property market slowdown.

Despite official assurances of recovery in the property market, mainland property developers in Hong Kong saw their stocks drop by 2%. Meanwhile, China imposed tariffs on Canadian agriculture goods, escalating trade tensions sparked by U.S. tariff policies. In contrast, defense stocks improved by 0.6% while tech shares, and notably artificial intelligence stocks, experienced notable declines.

(With inputs from agencies.)