January 28, 2023

Hong Kong stocks led losses in Asia due to Chinese unrest, and oil is at a low in 2022

Hong Kong stocks led losses in Asia due to Chinese unrest, and oil is at a low in 2022

There is a 30% chance that China will open earlier than expected: Goldman Sachs

China is likely to reopen in April next year after the National People’s Congress convenes, but there is a chance authorities will reopen earlier due to difficulties keeping Covid issues under control, according to Goldman Sachs.

China’s chief economist Hui Shan said there is a 60% chance that the above scenario will occur.

“There is also a 30% chance of reopening early precisely because of the difficulty of keeping Covid under control, and the lack of medical preparedness suggests it could be a somewhat chaotic process,” she said.

“The medical preparations are not ready yet, while the virus has evolved in this way [that] It becomes very costly to continue to implement this dynamic no-Covid policy,” she said.

She said policymakers need to weigh the costs and benefits of tough Covid restrictions as protests erupt across the country.

“This isn’t something they’ve tried before [or] She had a lot of experience dealing with the previous courses.”

– Su Lin Tan

Oil futures extended their losses, and US crude touched its lowest levels for the year

US crude futures and Brent crude futures both fell more than 2% each in morning trade in Asia, focusing on concerns about faltering demand from China.

West Texas Intermediate futures It fell to $73.86 a barrel, its lowest level since December 2021, while Brent Crude Futures It fell to $81.16 a barrel, the session low so far.

WTI was down 2.58% at $74.31 a barrel, while Brent was down 2.37% at $81.65 a barrel.

– Abigail Ng

Hong Kong movers: Technology, electric vehicles and real estate stocks drop; Casinos rise

Consumption will rise due to pent-up demand if China ends lockdowns: BofA

An economist says easing China's Covid measures is

Helen Qiao, chief China economist at Bank of America Securities, said household confidence will rebound once China reopens, thanks to surplus savings and pent-up demand.

“We’ve seen household savings cumulatively year-to-date at the end of October amount to about RMB5 trillion, compared to a normal year, it’s only about RMB2 trillion,” she said in an interview with CNBC’s “Squawk Box Asia”.

“People are reducing their loans but actually increasing their family’s deposits, because they have nowhere to spend,” she said.

– Su Lin Tan

The analyst says lowering China’s reserve requirements won’t make much difference with Covid rules still in place

China’s latest move to cut reserve requirement ratio For banks, 25 basis points will not matter much to their economy without a radical shift from tough Covid restrictions, according to The Economist Corporate Network.

“Consumer and investor sentiment has been hit so badly by these policies that you won’t see a recovery in any meaningful sense until there is a turnaround,” Matty Peckink, the organization’s China director, said on CNBC. “Squawk Box Asia”.

Bekink emphasized how sensitive investor sentiment has affected markets in the past.

“We’ve already seen markets move quite a bit on rumors that Beijing is going to relax — that was only a few weeks ago,” she said.

“The lockdowns seem endless and relentless,” Peking said.

– Jihe Lee

Other currencies also at risk due to Chinese unrest: Standard Chartered

Global currencies will also be at risk of weakness along with the offshore Chinese yuan amid turmoil in China over its anti-Covid policies due to how supply chains will be affected, according to Standard Chartered Bank.

“The main question about how the world will react is how does the Chinese supply chain respond,” Stephen Englender, managing director of Standard Chartered Bank, said on CNBC. “Squawk Box Asia”.

“If there is more disruption, I think it’s very risky,” he said. “Not only CNH, but other currencies will be at risk.”

Englander added that traders may be looking to reduce their exposure to further risk.

– Jihe Lee

CNBC Pro: Asset manager picks three global retailers to sell amid decline in consumer spending

Stocks at mass-market retailers will decline as profit margins shrink, and consumers will cut spending next year, according to Plurimi Wealth’s chief investment officer.

Patrick Armstrong told CNBC’s Pro Talks that he was betting against a Japanese retailer, multinational apparel company and Canadian e-commerce platform by shorting their shares.

Armstrong believes that consumers will hold back on spending next year amid rising interest rates and household bills.

CNBC Pro subscribers can read more here.

– Ganesh Rao

Oil prices drop as China’s Covid-19 protests continue

Crude oil futures fell early in Asia as COVID cases, virus restrictions and unrest in China rose, raising concerns about demand from the world’s second largest oil consumer.

West Texas Intermediate futures It decreased by 0.35%, to $76.01 per barrel, while Brent Crude Futures It lost 0.26%, to $83.41 a barrel.

Oil prices fell sharply last week as increasing lockdowns in China stoked demand concerns, ANZ Research’s Brian Martin and Daniel Hynes wrote in a note on Monday.

“This continues to be a headwind for oil demand,” they said, adding that the impact of rising Covid cases was reflected in China’s mobility data as well.

– Abigail Ng

CNBC Pro: Buy a Big Tech stock that’s at an “attractive” entry now, says portfolio manager

One Big Tech stock is at an “attractive” price point to buy right now, according to Brian Arkes of Foord Asset Management.

Arcese, a portfolio manager with the company, expects growth in the “mid-teens” despite cyclical headwinds in its industry.

CNBC Pro subscribers can read more here.

– Wizen tan

Offshore Chinese Yuan weakened in Asia morning as covid protests continue

The offshore Chinese yuan It weakened sharply against the US dollar amid negative sentiment over unrest in China due to Covid restrictions.

The currency fell about 0.8% against the US dollar to 7.2529 in Asian morning trade.

The dollar index It rose 0.32% to 106.29, with investors potentially seeing the dollar as a safe-haven asset as concern grows about China.

– Jihe Lee