Asia Pacific markets fall as recession fears mount China vows to

Asia-Pacific markets fall as recession fears mount, China vows to stabilize economy

Oil futures rise on hopes of demand recovery in China

Oil futures rose in morning trade in Asia as optimism over China’s reopening, which has prompted a rebound in demand, outweighed recession fears.

Brent crude oil futures rose 1.16% to $79.96 a barrel, while US West Texas Intermediate futures rose 1.18% to $75.17 a barrel.

China recently unveiled plans to increase flights to allow for a rebound in travel for the upcoming Lunar New Year holiday, Caixin reported last week.

According to the report, officials have laid plans to reach nearly 90% of pre-pandemic levels by the end of January.

– Jihye Lee

Hong Kong casino stocks fall despite renewed licenses

Shares in Hong Kong-listed Macau casinos fell in the morning session in Asia despite winning 10-year concessions to operate their integrated resorts.

A concession is essentially an operating agreement with the government, which in turn licenses the operators.

Wynn Macau fell 8% while MGM China lost about 12%. Sands China was also down 4% and Galaxy Entertainment was down 3%.

The moves come as media reports of a rising death toll in Beijing and Shanghai ordered school closures, dampening investor sentiment over China’s path to reopening.

– Jihye Lee, Contessa Brewer

China to focus on stabilizing economy in 2023: Xinhua

China will prioritize stabilizing its economy and stepping up policy adjustments to meet key targets set for 2023, state media agency Xinhua reported last week at the conclusion of the annual Central Economic Work Conference.

“Proactive fiscal policies should be strengthened for their effectiveness, with a better mix of tools, including budget deficits, earmarking and interest rate subsidies,” says the report.

Grow Investment Group’s Hao Hong said while he expects supportive measures like rate cuts, he doesn’t think it will become its own version of quantitative easing. QE is a policy previously adopted by the US Federal Reserve to boost economic activity by increasing liquidity.

“While some prominent economists are arguing for QE in China, the recent Central Economic Work Conference suggests a more measured approach,” he said. “We believe that liquidity expansion will be more structural and targeted than blanket easing.”

– Jihye Lee

CNBC Pro: Goldman Sachs looks ahead to tech in Greater China – and names its top picks for 2023

After a difficult few years for Chinese tech stocks, investors are now hoping the worst is behind them.

What’s next for the rundown sector? Goldman Sachs shares its outlook for Chinese tech and reveals how investors can trade the sector in 2023.

Pro subscribers can read more here.

– Zavier Ong

Fri, December 16, 2022 12:32 PM EST

Fed’s Daly says ‘nothing but hope’ in inflation data ‘far off’ from target

San Francisco Federal Reserve Chair Mary Daly said Friday she welcomes the latest inflation news, but changing her mind about where policy needs to go is not enough.

The October and November CPI readings were “good news” but “we see nothing but hope in the inflation data right now and I get confidence in evidence, not hope. So I’m hopeful on a good truck, but I won’t be hopeful until I see repeated evidence that inflation is indeed back on track for 2% in the coming years,” Daly said in an interview dated American Enterprise Institute was held.

“We are far from our price stability target,” she added.

Earlier this week, the Fed raised its benchmark interest rate by half a percentage point, the seventh hike of the year, which brought the fund level to a target range of 4.25% to 5%.

Daly, a non-voter this year on the rate-setting Federal Open Market Committee, said her own expectations of where rates are headed are likely higher than current market prices. Daly will vote again in 2024.

– Jeff Cox

CNBC Pro: Analysts love these 3 renewable energy stocks that offer more than 50% upside potential

According to the International Energy Agency, the expansion of renewable energies is expected to increase exponentially over the next five years.

The IEA predicted earlier this month that solar and wind power would grow fivefold, equivalent to the combined installed clean power capacity of the last 20 years.

Given these prospects for the energy transition towards renewable sources, CNBC Pro looked for stocks that could offer opportunities for investors in the sector.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Fri, December 16, 202210:51 PM EST

The Fed is making a “terrible mistake” by continuing to hike, says Wharton’s Siegel

According to Jeremy Siegel, a finance professor at the University of Pennsylvania’s Wharton School of Business, the Federal Reserve’s plans to continue raising interest rates into next year increase the likelihood of a very difficult downturn.

“I think the Fed is making a terrible mistake,” he told CNBC’s Squawk on the Street on Friday. “Their plan, their dot plot, is way too narrow. Inflation is basically over, despite the way the Chairman is doing it [Jerome] Powell characterizes it.”

According to Siegel, the central bank should refrain from raising interest rates further next year or keeping rates elevated.

“Talk of going higher and staying high in 2023 would guarantee a very steep recession in my view,” he said.

— Samantha Subin

Fri, December 16, 2022 12:22 PM EST

UBS raises forecast for China 2023 and lowers forecast for 2022

UBS has upgraded its outlook for China’s gross domestic product to 4.9% in 2023, up from 4.5% previously, according to chief China economist Wang Tao, citing an earlier and faster reopening in the country.

Wang said the company expects weaker fourth-quarter GDP for 2022 and cut its full-year forecast to 2.7% from 3.1%, noting weaker growth in November with a recent spike in Covid cases.

The company added that the Central Economic Work Conference is likely to prioritize stabilizing growth and supportive macro policies for the coming year.

“We expect fiscal policy to remain proactive with a modest increase in the headline deficit and a new special LG [local government] Bonds, monetary and credit policies to remain supportive with continued ample liquidity, but another rate cut is unlikely,” Wang said in the statement.

– Jihye Lee