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China, Hong Kong stocks slip on tensions, softer inflation data


SHANGHAI, April 12 (Reuters) – China and Hong Kong stocks edged lower on Wednesday morning, with risk appetites curbed by rising geopolitical tensions as well as softer China producer inflation data that could spur worries on sustainability of the country’s economic recovery.

But market sentiment got some support from China’s economic integration plan for the Guangdong-Hong Kong-Macau Great Bay Area, with shares of port operators and developers in the region surging.

China’s CSI300 index was down 0.1 percent, to 3,515.55 points, by the lunch break, while the Shanghai Composite Index lost 0.3 percent, to 3,278.53 points.

In Hong Kong, the Hang Seng index dropped 0.2 percent, to 24,046.47 points, and the Hong Kong China Enterprises Index shed 0.5 percent, to 10,114.10.

Participants are closely watching developments in Syria following the U.S. missile strike, and tensions in the Korean Peninsula.

On the economic front, data released on Wednesday showed China’s producer price index (PPI) rose just 0.3 percent in March, cooling for the first time in seven months.

Annual consumer price inflation edged up to 0.9 percent, up slightly from the previous month but well below the 1.7 percent averaged during the first two months of the year.

But traders say any fears of renewed economic slowdown were partly offset by newly-announced plans to build Xiongan Economic Zone near Beijing, as well as the Guangdong-Hong Kong-Macau Great Bay Area.

“Cooling inflation has been largely expected,” Wu Kan, head of equity trading at investment firm Shanshan Finance said, citing the recent weakness in commodity prices in Shanghai.

“But thematic investments around those massive economic zone plans will continue as such projects will boost demand for building materials and contribute to economic growth.”

Guangdong-based developers and port operators, including Shenzhen Yan Tian Port and Gree Real Estate climbed on Wednesday, taking the baton from “Xiongan concept” stocks.

Most listed Chinese lenders sagged after China’s banking regulator told lenders to conduct “self-inspections” in areas such as using loopholes to circumvent rules, in order to reduce leverage. The move will potentially hurt banks’ balance sheet.