Hong Kong stocks up 3% as tech stocks rise; China’s activity data disappoints
Fertilizer is key to get Black Sea grain deal in motion again, says expert
A greater emphasis on fertilizer will help bring down the global cost of food and secure the extension of the Black Sea deal, said Michael Vatikiotis, senior advisor from Center for Humanitarian Dialogue.
He explained that 70% of Europe’s fertiliser production facilities are idle because of insufficient ammonium nitrate, which Russia produces a quarter of the world’s production of.
“I think what Russia is looking for is more concern on the part of the international community for the demand for fertilizer, so that it can sort of implement that deal,” said Vatikiotis, who added that a greater emphasis on fertilizer is needed to bring down the global cost of food.
— Lee Ying Shan
Japan’s monetary policy won’t change for the next nine to 12 months: Monex Group
The Bank of Japan will remain a “bastion of stability” for close to a year more because the output gap in the economy remains, Jesper Koll of Monex Group told CNBC after Japan released its third-quarter gross domestic product estimates.
He said the GDP figure, which missed expectations, confirms “how sensitive in a negative way, the Japanese consumer is” in the current environment.
Beyond the next 12 months, the central bank will need to pay attention to whether the US economy ends up with a soft landing or hard landing, Koll said.
He added that he is watching whether the Japanese government is able to come up with a structural industrial policy that encourages the business community to commit to their own investment expenditure.
There’s tremendous value in some Chinese tech stocks, says Primavera Capital
Shares of large Chinese tech companies are currently “just so depressed” and “dirt cheap,” said Fred Hu, founder and chairman of Primavera Capital.
The Hang Seng Tech index in Hong Kong is down more than 30% from the start of the year, though the index has bounced in recent weeks.
The Chinese government’s relentless crackdowns and zero-Covid policy has dampened the confidence of tech entrepreneurs and investors, but there is “tremendous deep value” in some tech stocks, Hu said.
“China is a nation that any other successful nation would need [for] technology and innovation … I think there’s an upside” for many such stocks, he added.
— Charmaine Jacob
Hong Kong-listed Chinese technology stocks jump early in session
Hong Kong-listed shares of Chinese technology companies rose significantly in the first hour of trade.
Tencent pink 7.6%, Meituan gained 5.9%, and Ali Baba pink 9%. The Hang Seng Tech index was up around 4%.
The moves come despite disappointing activity and retail sales data from China, and following US President Joe Biden and Chinese President Xi Jinping’s meeting ahead of the G-20 summit in Bali.
Private investment firm Safanad’s chief strategist John Rutledge said the discussion between the two leaders went “much better” than expected, though he mostly credited that to low expectations.
TSMC shares jump more than 9% on Berkshire Hathaway stake news
Shares of Taiwan Semiconductor Manufacturing Company listed in Taiwan jumped after Berkshire Hathaway a $4 billion stake in the disclosed company.
The stock soared as much as 9.44%, reaching the highest levels in nearly two months.
Berkshire added more than 60 million shares of the Taiwanese chipmaker’s American depositary receipts, worth $4.1 billion (1.2% of TSM) by the end of the third quarter, making Taiwan Semi the conglomerate’s 10th biggest holding at the end of September.
The stock was last up around 8%.
China’s industrial output, retail sales miss expectations in October
China’s industrial production grew 5% in the month of October compared with a year ago, slowing from an increase of 6.3% seen in September. The latest figure misses estimates of a 5.2% rise predicted in a Reuters poll.
Separately, retail sales in China fell 0.5% in October from a year ago, missing expectations.
Analysts polled by Reuters expected a 1% increase, and retail sales grew 2.5% in September.
CNBC Pro: Top Morningstar strategist says stocks are undervalued by 15% and shares 6 favorites
With many stocks in a bear market, equities could be undervalued by 15%, according to Morningstar.
The equity research firm’s chief US strategist believes headwinds that were present earlier in the year will start to recede at the start of next year and benefit stocks.
Dave Sekera also shared his “fair value” assessment on six companies with a “wide economic moat” that will outperform in such an economic environment.
CNBC Pro subscribers can read more here.
Australia’s central bank hints at larger interest rate hikes ahead
The Reserve Bank of Australia hinted at further and possibly larger interest hikes ahead in its efforts to tame inflationary pressures, according to the minutes released from its latest meeting.
“The Board agreed on the importance of returning inflation to target and expects to increase interest rates further over the period ahead,” it said in the release.
The central bank had considered raising its cash rates by 50 basis points, but saw a stronger case to increase the rate by 25 basis points, it said.
Higher interest rates would be part of wider efforts to “establish a more sustainable balance of demand and supply in the Australian economy,” the RBA said, adding that members had not ruled out the possibility of returning to larger hikes if needed.
– Jihye Lee
Japan’s economy unexpectedly contracts in the third quarter, data shows
Japan’s economy unexpectedly contracted in the third quarter from a year ago, official preliminary estimates showed.
Gross domestic product shrank 1.2% in the July-to-September quarter compared with the same period last year, missing estimates for growth of 1.1% in a Reuters poll.
CNBC Pro: China is easing its Covid measures. Here’s how market pros are playing it
Which stocks could benefit if China rolls back its zero-Covid policy? Market pros reveal how to play a reopening as China eases some of its virus controls.
Pro subscribers can read more here.
— Zavier Ong
Stocks off lows of session on Brainard comments
The S&P 500 rebounded off its lows and Treasury yields eased from their highs a bit late morning after Federal Reserve Vice Chair Lael Brainard said it may “soon” be appropriate to slow the pace of interest rate hikes, in a conversation with Bloomberg News.
The S&P 500 was last just down 0.1% after being off by more than 0.7% at one point Monday. The 10-year Treasury yield was 5 basis points higher to 3.878% after trading as high as about 3.90% earlier.
“I think what’s really important to emphasize is we’ve done a lot but we have additional work to do both on raising rates and sustaining restraint to bring inflation down to 2% over time,” Brainard added.
—John Melloy, Jeff Cox
Fed’s Waller’s message to markets: Rates endpoint is ‘still a ways out there’
Fed Governor Chirstopher Waller said that, while the central bank could raise rates at a slower pace next month, this shouldn’t be interpreted as a softening sign in its fight to bring down inflation.
“Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there,” Waller said Sunday.
Earlier this month, the Fed raised rates by 75 basis points to their highest level since 2008.