China stocks flat as consumer prices contract; Country Garden shares slump

CIFI Holdings (Group)

09/11/2023 04:51

(Updates to midday)
       HONG KONG, Nov 9 (Reuters) - China stocks were flat on
Thursday after the latest consumer prices data revived worries
on recovery, while investors weighed developments in the
property sector and other stimulus measures.
         The blue-chip CSI 300 Index  .CSI300  and the Shanghai
Composite Index  .SSEC  wobbled in the morning trade and closed
largely unchanged by midday. Hong Kong's Hang Seng Index  .HSI 
edged down 0.3%. 
         Data showed China's consumer prices swung back into
contraction and factory-gate deflation persisted in October as
domestic demand struggled, casting a shadow on the outlook for
any broader-based recovery in the world's second-largest
economy.
        The consumer price index (CPI) dropped 0.2% in October
from a year earlier, faster than expected.
        "What we are seeing today is mainly the result of a
supply excess, rather than a collapse in demand," said Robert
Carnell,  regional head of research for Asia-Pacific at ING.
    Analysts said overall investor sentiment is marginally
picking up as China's economic data shows signs of stabilisation
and U.S. is pausing rate hikes.
         Still, shares of Chinese property giant Country Garden
 2007.HK  fell over 7% in a volatile morning trade，giving up
some of the previous day's big gains on the back of a report
that Beijing had asked Ping An Insurance Group to take a
controlling stake in the embattled homebuilder. 
    Property stocks rose late on Wednesday after Reuters
reported China's State Council had instructed the local
government of Guangdong province to help arrange a rescue of
Country Garden by Ping An.
    Ping An subsequently said in a statement to Reuters it has
"not been asked by (the) Government to takeover Country Garden".
    Stocks of other Chinese developers were lower, with the Hang
Seng Mainland Properties Index  .HSMPI  down 3.7%, led by a
decline in China Evergrande Group  3333.HK  and CIFI Holdings
 0884.HK  shares. 
    Ping An's Hong Kong-listed shares  2318.HK  dropped 1.6%
while its mainland A shares  601318.SS  were down nearly 3%. 
    Toxic assets or bankruptcy companies usually go to
distressed asset managers in China, BofA analysts said in a
note. 
    Previous experience shows Ping An is "likely wary of
becoming involved in (property) company operations and taking
excessive responsibility" which could impact its financial
stability, they said. 

 (Reporting by Summer Zhen; Editing by Lincoln Feast and
Muralikumar Anantharaman)
 ((summer.zhen@thomsonreuters.com; 852-3462-7739;))