FX.co ★ China Stocks Gain After Inflation Data

The Shanghai Composite Index increased by 0.6% to exceed 4,100, while the Shenzhen Component Index climbed by 1% to reach 14,100 on Friday. Both indices achieved new multi-year highs as investors evaluated the latest inflation data from China. Consumer price inflation in December accelerated to its quickest rate in nearly three years, largely driven by rising food costs, which mask underlying deflationary pressures in the economy. On the other hand, producer prices recorded their 39th consecutive monthly decline, although the drop was the smallest observed since August 2024. Earlier in the week, the People's Bank of China committed to reducing the reserve requirement ratio and lowering key interest rates to ensure ample liquidity and favorable monetary conditions. Leading the stock market gains were defense and AI-related companies, with Shanghai Stonehill up by 2.3%, BlueFocus Intelligent rising by 4.1%, China Spacesat increasing by 6%, China Aerospace surging by 10%, and Addsino Co advancing by 2.1%.