The Hang Seng index edged lower as investors reacted to growing worries about inflation in mainland China. The market is sensitive to any signs that Beijing may tighten monetary policy to cool down its rapidly growing economy.

Inflation Fears Weigh on Market

Concerns about inflation have been mounting in recent weeks, fueled by rising food and commodity prices. This has led to speculation that the People’s Bank of China may take steps to curb lending and investment, which could negatively impact Hong Kong-listed companies with significant mainland operations.

Sector Performance

• Financial stocks were among the biggest losers, with HSBC and China Construction Bank both trading lower.
• Property developers also saw declines as investors worried about potential government measures to cool the housing market.
• Energy stocks bucked the trend, supported by higher oil prices.

Analyst Commentary

Analysts noted that the market is likely to remain volatile in the near term as investors await further economic data and policy announcements from Beijing. They advised caution and suggested focusing on companies with strong fundamentals and limited exposure to mainland China.