Asian stocks drop, Chinese shares pressured by inflation

Shanghai Shenzhen CSI 300 and Shanghai Composite indexes dropped 0.9% and 0.7%, respectively, Hang Seng index declined 0.4%, Nikkei 225 dropped 0.3%, while Straits Times index dropped 0.3%

Asian stocks dropped on Wednesday, with Chinese shares pressured by signs of continued inflation.

Shares were also pressured by heightened geopolitical tensions between Japan and China.

Shanghai Shenzhen CSI 300 and Shanghai Composite indexes dropped 0.9% and 0.7%, respectively, while Hang Seng index declined 0.4%.

Government data showed Chinese consumer price index inflation rose year-on-year in November, but unexpectedly dipped from the prior month. Producer price index inflation contracted for a 38th straight month.

The figure showed inflation remained largely in play in the world’s second-largest economy, and sparked heightened concerns over growth going into 2026. It also showed domestic demand, which is a key driver of the Chinese economy, remained weak.

China’s Politburo pledged to unlock more fiscal stimulus in the coming months at its meeting this week. But the promises offered little immediate support to Chinese markets.

Chinese stocks were also pressured by sustained losses in chipmakers.

Nikkei 225 dropped 0.3%, while the broader TOPIX index was flat.

Japanese PPI inflation remained sticky in November, data showed earlier in the day, sparking more speculation over whether the Bank of Japan (BOJ) will hike interest rates soon.

The BOJ head earlier signalled that it will consider raising interest rates when it meets later in December, citing persistently sticky Japanese inflation.

Heightened geopolitical tensions between Japan and China also weighed on their respective stock markets, as a diplomatic row between the two countries showed few signs of easing.

Broader Asian stocks were largely on the backfoot. ASX 200 was flat after the Reserve Bank of Australia (RBA) struck a hawkish note on Tuesday, with Governor Michele Bullock largely downplaying expectations for more interest rate cuts.

Straits Times index dropped 0.3%, while KOSPI was flat.