Chinese ADRs fell in premarket trading on Monday, as investors worried about deflation after China reported a decline in consumer prices. YINN and Bilibili fell 4%; XPeng, Li Auto, and Alibaba fell 2%; PDD Holdings, JD.com, and NIO fell about 1%.

Official data released on Sunday showed that China’s consumer price index (CPI), a gauge for measuring inflation, fell 0.7 per cent in February from a year earlier, versus a 0.5 per cent gain in the previous month. It was the first negative reading in 13 months.

Moreover, China’s Producer Price Index (PPI), another inflation gauge, fell 2.2 per cent year on year in February, the 29th straight month of declines since October 2022.

Although the CPI was expected to rebound to zero in March, China’s economic growth would “lose some momentum”, Lu Ting, an economist at Nomura, said in a report after the CPI data was released. Causes included a payback effect from export front-loading, the tapering impact of a trade-in scheme for cars and appliances, escalating US-China trade tensions and the slow property-market recovery, he added.

“Chinese retail investors might be riding the market rally, but the fact that household spending remains subdued suggests most are either tapped out or too cautious to dive into equities,” Stephen Innes, managing partner for SPI Asset Management, said in a note. “A stock market pop doesn’t fix a sluggish economy overnight.”