Asia-Pacific markets mix as BHP, Chinese property stocks surge against weak Japanese trade

Fitch Rating Downgrades Country Garden

Fitch upgrades Chinese homebuilder Country Garden Holdings’ long-term foreign and local currency issuer default ratings (IDRs), senior unsecured ratings, and outstanding debt ratings from ‘BBB-‘ to ‘BB+’ I pulled it down.

In a report, Fitch said, “The downgrade reflects the weakening of Country Garden’s financial flexibility due to challenges in China’s real estate sector.

“Fitch believes Country Garden’s liquidity buffer is ample, but deteriorating capital market conditions are narrowing the company’s funding sources, while declining sales and working capital commitments are putting pressure on cash generation. I believe that I am under pressure because of the

– Surin Tan

China property stocks make surprising leap after Beijing bond guarantee pledge

Chinese property stocks unexpectedly surged after Beijing directed state-owned China Bond Insurance Co Ltd to provide guarantees for onshore bond issuances by “model private developers” including Hong Kong-listed Longfor Group .

The Hang Seng Index fell 1.73% as major stocks such as Tencent, Ping An and PetroChina fell, but there were new shoots among Chinese developers like Longfor.

Longfor shares rose 11%, while top developer Country Garden rose 9%. Also, China Res Land rose 3.2%, R&F Properties rose 1.26% and China Vanke rose 1.72%.

To revive a beleaguered Chinese (housing) real estate market, regulators plan to provide liquidity support to select private developers by underwriting new municipal bonds raised. financial information provider REDD said.

But Jessica Tee, Asia and Greater China investment specialist at BNP Paribas Asset Management, said investors remain skeptical until there is evidence confirming that these private developers are benefiting from government funding. said that it would remain the same.

“That said, we believe the recent mortgage boycott is unlikely to pose systemic risk unless the situation spirals out of control,” Tee said.

“Importantly, Beijing’s policy response to the issue has been swift, with authorities motivating affected homeowners to defer mortgage payments and mobilizing resources from banks, state-owned enterprises and local governments. to revive a suspended project or a developer.”

The more anticipated easing of macroeconomic policies should mitigate the risks the real estate market may pose to economic growth, Tea added.

– Surin Tan

Despite rate cuts, China’s economy may need more growth policies

China needs more growth policies to stabilize the economy after the People’s Bank of China unexpectedly cut key interest rates, Central Bank-backed Financial News reported on Tuesday.

The People’s Bank of China on Monday cut the one-year policy loan rate by 10 basis points to 2.75% and the 7-day reverse repo rate to 2% from 2.1%. Economists expected the central bank to cut rates.

Financial News quoted Wen Bin, chief economist at China Minsheng Bank, saying that for the economy to recover further, the rate of increase in infrastructure investment needs to accelerate, especially as the recovery slows. said.

Wen also said weak domestic demand was a problem for the economy and that the Chinese government needed to come up with policies to support economic growth.

Wang Qing, chief macro analyst at Oriental King Cheng, also said the Chinese government is likely to boost fiscal and industrial policies to boost economic recovery.

Given the possibility of future pandemic outbreaks, Beijing should prioritize macro policy adjustments to further improve the economy, said Luo Hangjie, a senior macro researcher at the Zhixin Investment Institute. Stated.

– Surin Tan

China rate cut is modest first step, professor says

Surprise for the People’s Bank of China Lowering the borrowing cost of medium-term policy loans is a modest first step, said Eswar Prasad, a senior professor of international trade policy at Cornell University.

“Right now the rate cut is very modest. It frees up some liquidity, but 10 basis points is not a lot,” he said Tuesday on CNBC’s Squawk Box Asia.

The People’s Bank of China has cut the one-year medium-term loan facility for 400 billion yuan ($59.3 billion) of loans to some financial institutions by 10 basis points to 2.75%, according to an announcement on the central bank’s website. Did. He also cut the 7-day reverse repo rate by 10 basis points to 2%.

“This seems like a very small step. But the PBOC is trying to send a very coordinated signal here that they are ready to intervene if the situation warrants it,” the professor added. rice field.

“I think they are very cautious about unleashing any significant monetary stimulus because they know it creates medium-term financial risk.”

— Sumathi Bala

Australia investigates competition and consumer issues in social media services

The Australian Competition and Consumer Commission said it would investigate competition and consumer issues on social media services such as Facebook, Instagram, Twitter, TikTok and Snapchat.

According to the ACCC, the report will also consider YouTube, Reddit and Discord.

“We want to study long-term trends in user preferences and engagement to consider how users choose social media services,” the company said in a statement. The organization plans to investigate “whether new entrants such as TikTok have changed the competitive landscape.”

On Friday, China released a list of algorithms that are helping tech giants such as Alibaba and Tencent to succeed. The filing also mentions how Douyin, the Chinese version of his TikTok, uses such data to recommend content to users.

Lee Ji-hye

Gas prices continue to climb north as Japanese industry lags

Bill Perkins, head trader and CEO of Skylar Capital Management, told Street Signs Asia that energy prices will continue to rise amid strong consumption.

Rising gas prices have forced northern hemisphere countries, including Asian countries like Japan, to rush to import liquefied natural gas. Asian benchmark spot prices are on an upward trajectory and Japanese industrials are in the red on Tuesday.

“These are traders making profits and I think they are set back due to China’s concerns about the economic slowdown and China’s real estate situation. It’s exaggerated,” he said.

Perkins said oil prices will continue to surge relentlessly, with WPI oil prices above $100 a barrel and Brent above $120 a barrel.

– Surin Tan

British-Australian mining company BHP has soared after becoming the second-largest profit ever.

Shares of British-Australian mining company BHP soared 3.80% after posting its second-largest profit ever and a record dividend worth $16.3 billion.

Results for the full year to June 30 exceeded expectations.

BHP CEO Mike Henry said BHP is entering fiscal 2023 in “a great strategic, operational and financial position.”

He also expects China to “emerge as a source of stability for commodity demand over the next year as policy support gradually takes hold.”

“At the same time, we expect a slowdown in advanced economies amid continued geopolitical uncertainty and inflationary pressures, along with tighter monetary policy,” he said in a press release.

“The direct and indirect effects of the European energy crisis are of particular concern. Tight labor markets will continue to pose challenges for global and local supply chains.”

The situation is reversed for rivals Rio Tinto and Fortescue Metals, which have both recorded declines.

– Surin Tan

US, Japan, South Korea complete missile search and track exercise

The Pentagon said the U.S. Navy, Japan’s Maritime Self-Defense Force and South Korea’s Navy have completed missile warning and ballistic missile search and track exercises off Hawaii’s Pacific Missile Range Facility (PMRF).

Participants from Japan, the United States, and South Korea shared tactical data link information based on a trilateral intelligence sharing agreement.

“Following the June 11 Trilateral Ministerial Meeting in Singapore in Singapore, this missile warning and ballistic missile search and track exercise is a three-way effort to meet North Korea’s challenges and protect our shared security. It demonstrated the commitment of the United States, South Korea and Japan to foster cooperation and prosperity and strengthen the rules-based international order,” the Pentagon said in a memo.

– Surin Tan

Chinese fast food operator Yum debuts in Hong Kong

Chinese fast food operator Yum China Holdings said on Monday it had applied for conversion from a secondary listing to a primary listing in Hong Kong. It is currently dual-listed on the New York Stock Exchange.

“Since our secondary listing in Hong Kong in 2020, we have strengthened our access to shareholders in Asia. We have diversified our investor base and leveraged additional capital pools,” said Yum China CEO One Joey Wat said in a press release.

“The dual-primary listing brings us even closer to our employees, customers and other stakeholders. is reduced,” he added.

Yum has exclusive rights to operate fast food brands such as KFC, Pizza Hut and Taco Bell brands in China.

– Surin Tan

CNBC Pro: Strategists Name Global Stocks to Buy Despite Slowing Growth

Patrick Armstrong, chief investment officer at Purmimi Group, said there are pockets of “attractive value” in three sectors, even in the midst of an economic slowdown.

These sectors are “incredibly cheap,” he told CNBC’s “Squawk Box Europe,” listing his favorite stocks and explaining why.

Pro subscribers can read the story here.

— Tan Weizhen

CNBC Pro: Tesla valuation doesn’t make sense until it hits this level, fund manager says

Tesla may be one of the best-known electric car makers, but fund manager and technology investor Paul Meeks thinks the stock is still too expensive.

On CNBC Pro Talks, Meeks revealed what valuations Tesla finds “more interesting.”

Pro subscribers can read the story here.

Xavier On

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