China’s stock markets edged higher on Wednesday, while Hong Kong equities remained largely subdued as fresh macroeconomic data underscored an uneven economic recovery.
By the midday break, the blue-chip CSI300 index rose 0.1%, and the Shanghai Composite gained 0.2%. In Hong Kong, the benchmark Hang Seng Index held flat, while the Hang Seng Tech Index slipped 0.6% under pressure from softening technology counters.
Inflation Ticks Up on Commodity Pressures
Fresh figures showed that China’s factory-gate and consumer inflation accelerated in August. The uptick was primarily driven by rising commodity and food prices, amplified by supply risks stemming from ongoing conflicts in the Middle East. Sectors such as energy, non-ferrous metal smelting, and shipping advanced sharply as climbing oil prices boosted commodity-linked equities.
However, analysts noted that the inflation pick-up lacked broad-based momentum. Weak domestic demand continued to weigh heavily on consumer-facing sectors, with household appliance prices slipping back into negative territory and service-related inflation remaining subdued. Real estate and media stocks also underperformed amid lingering concerns over domestic economic activity.
Cautious Outlook and Growth Forecasts
Investor sentiment remained guarded regarding China’s longer-term growth trajectory. Highlighting these structural headwinds, BofA Securities maintained its 2026 economic growth forecast for China at 4.5%, while trimming its projections for 2027 and 2028 to 4.2% and 4.0%, respectively. The downgrades reflect growing concerns over persistent domestic drag and expectations that policymakers may be slow to introduce aggressive stimulus measures to revive softening economic momentum.
