Asian Stocks Cautious as Hong Kong's Hang Seng Falls on Tencent Losses Ahead of Key Inflation Data

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Most Asian stock markets remained cautious on Wednesday, with Hong Kong's Hang Seng index falling 0.6% due to steep losses in internet giant Tencent Holdings. The drop in Tencent's share price was due to its major shareholder, Prosus, depositing 96 million Tencent shares, worth $4.4 billion, into the Hong Kong Central Clearing and Settlement System this week, indicating a potential sale of shares. This move caused losses in other technology stocks such as Alibaba Group Holding and Baidu Inc. Similarly, electric carmaker BYD Co Ltd fell 1.9% after Warren Buffet’s Berkshire Hathaway further trimmed its stake in the firm.

Meanwhile, broader Asian markets were muted ahead of the release of key US consumer price index inflation data. This data is likely to factor into the Federal Reserve’s plans to raise interest rates. The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose marginally but were still affected by softer-than-expected inflation data released this week, indicating a staggered economic recovery in China. The minutes of the Fed’s March meeting were also awaited later in the day for more clues on monetary policy. However, there is speculation that the central bank has limited headroom to keep hiking rates, and higher interest rates and slower lending could spur a US recession this year, according to Minneapolis Fed President Neel Kashkari.

In conclusion, Asian stock markets are exhibiting caution and volatility as investors await key economic data and monetary policy cues. The ongoing uncertainty in the global economic recovery due to the COVID-19 pandemic, coupled with inflation fears, has made investors wary of making any major moves in the market. As the world navigates through the challenges posed by the pandemic, the path to a stable and sustained economic recovery remains unclear.

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