Asia Pacific markets trade mixed as region enters 2023

Asia Pacific markets trade mixed as region enters 2023

According to IIFL Securities, India’s cement stocks will do well amid government infrastructure spending

India’s domestic cement stocks are likely to rise due to increased government spending on infrastructure, said Sanjiv Bhasin, director of investment management firm IIFL Securities.

“Government spending on both business and real estate and [developments on] infrastructure, cement companies will do well,” Bhasin said on CNBC’s Street Signs Asia on Tuesday.

He said his firm is sympathetic to companies such as Larsen & Toubro, Ultratech India and Kotak Mahindra Bank, adding that cement prices in India are expected to rise as the country enters a period of high construction activity.

India's cement stocks

Australian miners metal prices fall as China Covid cases rise

Shares of Australian-listed mining companies fell on Tuesday afternoon as metal prices fell in Shanghai as Covid infections surged in mainland China.

Copper contract trading on the Shanghai Futures Exchange fell 0.7% to 65,670 yuan a ton in February, while aluminum fell 2.7% to 18,175 yuan a ton.

Sandfire Resources was down 0.18%, while Oz Minerals traded up 0.25% – Rio Tinto was down more than 1%, while Yancoal Australia was down more than 4.6% and Whitehaven was down 5.89%. Fortescue Metals lost 0.73% and South32 traded lower by 0.5%.

– Jihye Lee

Asia’s consumer growth remains a “massive challenge” for the region, according to the Singapore Exchange

Inflation in Asia could peak lower and earlier than in the US and Europe, the strategist says

Consumer growth in Asia remains a “massive challenge” for the region as its economic growth depends heavily on trade, said Geoff Howie, market strategist at the Singapore Exchange.

Howie pointed to South Korea’s and Taiwan’s export declines since May 2021, as well as Singapore’s non-oil exports, which shrank 14.6% in November.

There have been “many hinges of trade and technology and we expect moderation in global trade,” he said on CNBC’s Street Signs Asia on Tuesday. “Consumer growth is an area that we really need to keep an eye on,” Howie said.

– Charmaine Jacob

“Tough first half, better second half for tech stocks”: Jefferies shares outlook for 2023

Tech stocks will face a difficult environment in the first half of 2023, says the analyst

The first half of 2023 will be a “tough setup” for tech stocks, Brent Thill, managing director and senior analyst at investment firm Jefferies, told CNBC’s Street Signs Asia on Tuesday.

“They still have the economic hangover that will impact earnings early this year. Companies need to lower their numbers and expectations are still falling,” Thill said.

He predicted a trend reversal in the second half of 2023 as it “takes time” for the impact of macroeconomic conditions such as rising interest rates to dissipate and “investors start rolling back 2024 numbers.”

“I think the worst-case scenario is that 2023 could be a total wash,” Thill said, adding that Jefferies expects a third-quarter recession, which is later than most expected.

-Sheila Chiang

Oil prices are set to fall to $70 levels by the end of 2023, an analyst says

According to Ed Morse, Citi’s global head of commodity research, the price of Brent oil will fall to the low-end of $70 a barrel by the end of the year, which will perpetuate volatility around oil markets.

“We expect volatility to be around the same as last year,” Morse said. “We expect Brent prices to drop to the low 70s by the end of the year,” he estimated.

A number of oil-producing countries are facing extreme difficulties, Morse said. He also expects demand for oil to be kept low due to a prolonged recession in China.

Developments in Russia’s war against Ukraine will also increase price volatility, Morse added.

Brent crude fell 0.43% to $85.57 a barrel. U.S. West Texas Intermediate crude was up 0.39% to trade at $79.95.

– Lee Ying Shan

Japanese yen at strongest levels in seven months

The Japanese yen hovered around its strongest level since early June, data from Refinitiv showed.

The currency was last traded at 129.7 against the US dollar after rising above the key technical level of 130.4 last seen in August. At the end of last year, the yen depreciated significantly, hitting its weakest level in 32 years.

The currency weakened against the greenback above 151 in mid-October as the Bank of Japan maintained its ultra-dovish monetary policy and yield curve control strategy. But the yen has since strengthened after the central bank widened its YCC band last month.

– Jihye Lee

China’s Caixin PMI shows further decline in factory activity

China’s factory activity slipped further into contraction territory in December, a private sector survey showed.

The Caixin/Markit manufacturing PMI fell further in December to 49 from 49.4 in November – staying below the 50-point mark separating growth from contraction.

The survey showed improved optimism among companies, the release said, adding that companies expressed confidence in China’s economic recovery following the easing of most of its strict Covid measures.

Separately, China’s National Bureau of Statistics said the official manufacturing PMI for the month fell to 47, marking the biggest drop since the Covid outbreak began in January 2020.

– Jihye Lee

Singapore economy grew by 3.8% in 2022

Singapore’s economy grew 3.8% for the full year 2022, according to data released by the Ministry of Trade and Industry on Tuesday.

The economy grew 2.2% year on year in the fourth quarter, the slowest pace since mid-2021 but topped expectations of 2.1% from a Portal poll.

The latest figures reflect the ongoing recovery in the services sector after domestic and border restrictions were lifted since April, the ministry said in a statement, adding that the accommodation sector had expanded for the first time since mid-2021.

– Jihye Lee

Fri, December 30, 202221:24 PM EST

The Bank of Japan is reportedly considering raising its January inflation forecast, according to the Nikkei

The Bank of Japan is reportedly considering raising its inflation forecasts in January to reflect price growth closer to its target of 2% in fiscal 2024, according to a Dec. 30 Nikkei report, citing known sources.

According to the report, the move could lay the groundwork for a shift to tighter fiscal policy.

The report comes more than a week after the Bank of Japan changed its bond yield controls, which allowed long-term interest rates to rise further. The interest rate on the 10-year bond is allowed to fluctuate by half a percentage point above and below the national target of 0% – up from a quarter percentage point range.

Retail sales also rose in Japan, rising for the ninth straight month in November.

– Darla Mercado

Fri, December 30, 20221:45 PM EST

Expected week: Asia-Pacific PMIs, trade data, inflation data

Key economic events in the Asia-Pacific region next week will be dominated by the region’s Purchasing Managers’ Index readings.

China’s national statistics bureau is expected to release official manufacturing and non-manufacturing PMI prints on Saturday. Portal expects China’s factory activity to show a fall of 48.

South Korea is expected to release its December trade data over the weekend, in which economists polled by Portal predict a 10.1% year-on-year decline.

Singapore is expected to release manufacturing PMI readings next week, while S&P Global is due to release its PMI readings for South Korea, Indonesia and India on Monday.

Inflation data for the Philippines and Indonesia will also be closely watched, with releases scheduled for Tuesday and Monday respectively.

Japan’s PMI readings and China’s private services PMI survey will be released on Wednesday. Singapore is due to release November retail sales and South Korea’s December unemployment rate on Thursday.

– Jihye Lee

CNBC Pro: Wall Street veteran names the stocks that could go to $0 — and his tech favorites

2022 has marked the end of an era of easy money, and that’s bad news for companies with a “growth at any cost” approach, said David Trainer, CEO of investment research firm New Constructs.

In the coming year, investors must exercise due diligence in distinguishing between good and bad companies, he told CNBC Pro.

That’s because the 2022 Federal Reserve rate hikes “ended the era of super easy money” and exposed many companies with bad business models. He calls these high-cash-burn companies “zombie stocks.”

He highlights a list of such names to avoid and what to buy instead.

CNBC Pro subscribers can read more here.

— Wheat Tan

Fri, December 30, 2022224:37 EST

Definitive market statistics for 2022

Friday was the last trading day of 2022, but also for the quarter, month and year. Here’s how the key market averages have performed over these periods.

The Dow closed:

  • Down 8.78% for the year
  • up 15.39% for the quarter
  • month down 4.17%
  • down 0.17% for the week

The S&P 500 ended:

  • Down 19.44% for the year
  • up 7.08% for the quarter
  • month down 5.90%
  • down 0.14% for the week

The Nasdaq Composite ended:

  • Down 33.10% for the year
  • Down 1.03% for the quarter
  • month down 8.73%
  • Down 0.30% for the week

The Russell 2000 Small Caps ended:

  • Down 21.56% for the year
  • up 5.8% for the quarter
  • month down 6.64%
  • up 0.02% for the week

— Jesse Pound, Christopher Hayes

CNBC Pro: 2023 is looking good for the market — particularly for an “extremely attractive” asset class: fund managers

According to a portfolio manager, markets have bottomed and things are looking good for stocks and bonds, which could rise more than 10% in 2023.

Jay Hatfield, CEO and portfolio manager at Infrastructure Capital Advisors, also highlighted the “investment themes of conviction” that he expects to be very attractive in 2023.

That includes an asset that he said could outperform its peers.

CNBC Pro subscribers can read more here.

— Wheat Tan