SHANGHAI: China and Hong Kong stocks finished the week lower on mixed economic data, while the market is expecting a key policy rate cut early next week.

China’s blue-chip CSI300 Index closed down 0.4%, while the Shanghai Composite Index dropped 0.2%. Hong Kong benchmark Hang Seng Index was down 0.4%.

For the week, the CSI300 Index and the Hang Seng Index lost 1.4% and 1.8%, respectively.

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 cut on Monday, which may help boost demand and aid the economic recovery in 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 1.8%, while utilities stocks were up 0.8%.

In Hong Kong, Hang Seng Tech Index dropped 0.9%, with electric carmakers Xpeng and Li Auto falling 5.2% and 3.5%, respectively.