China and HK stocks flat on mixed economic data, eyes on policy rate next week

China and Hong Kong stocks were roughly flat on Friday on mixed economic data, while the market is expecting a key policy rate cut early next week. Hong Kong benchmark Hang Seng Index was also flat. ** China's exports grew 2.3% in December from a year earlier, data showed on Friday, adding to signs global trade is slowly turning a corner with the prospect of lower borrowing costs on the horizon.

China and Hong Kong stocks were roughly flat on Friday on mixed economic data, while the market is expecting a key policy rate cut early next week. ** China's blue-chip CSI300 Index dropped 0.2% by the lunch break, while the Shanghai Composite Index was roughly flat. Hong Kong benchmark Hang Seng Index was also flat.

** China's exports grew 2.3% in December from a year earlier, data showed on Friday, adding to signs global trade is slowly turning a corner with the prospect of lower borrowing costs on the horizon. ** Meanwhile, China's consumer prices declined for a third month in December, though moderated, while factory-gate prices extended their prolonged slide, highlighting persistent deflationary pressures in an economy struggling to mount a solid recovery.

** "Consumption will likely pick up into the Lunar New Year, but more stimulus is needed to boost household spending and eliminate deflationary pressure," UBS analysts said in a note. ** There is growing expectation among market participants of a key policy rate on Monday, which may help boost demand and aid the economic recovery of the world's second-largest economy.

** "The lingering deflationary pressure justifies the expectation of an imminent rate cut, which is widely expected to materialise in the one-year medium-term policy facility (MLF) yield decision next Monday," said Ken Cheung Kin Tai, chief Asian FX strategist at Mizuho Bank. ** Sector wise, artificial intelligence (AI) shares were down 1.7%, while utilities stocks were up 0.9%.

** In Hong Kong, Hang Seng Tech Index dropped 0.3%, dragged down by electric carmakers, with Xpeng and Li Auto down 4.8% and 2.8%, respectively.