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Property stocks drop as Hong Kong shares slip in mixed Asia trade; Australia’s inflation rises

SINGAPORE — Real estate stocks in Hong Kong dragged the market lower as Asia-Pacific traded mixed on Wednesday. Australia’s inflation rose and investors looked forward to the Fed’s policy decision.

Property firm Country Garden’s stock plunged around 14% Wednesday after it said it would raise 2.8 billion Hong Kong dollars ($360 million) by selling 870 million new shares.

The shares were priced at 3.25 Hong Kong dollars, around a 12.63% discount to Country Garden’s Tuesday close.

The Hang Seng Mainland Properties index was 5.55% lower.

Hong Kong’s Hang Seng index fell 1.51%, and the Hang Seng Tech index slipped 1.65%. Heavyweight Alibaba dropped 3.83% after popping Tuesday after it announced plans for a dual primary listing in Hong Kong.

Elsewhere in Asia, the Nikkei 225 in Japan gained 0.18%, while the Topix index was fractionally higher.

Mainland China markets were slightly lower. The Shanghai Composite declined around 0.1% and the Shenzhen Component lost 0.19%.

In Australia, the S&P/ASX 200 hovered around the flatline after the inflation report.

We expect that any impacts on the AUD from today’s CPI will be short lived because the darkening global outlook will be a greater weight on AUD.
Kristina Clifton
Economist, Commonwealth Bank of Australia

South Korea’s Kospi shed 0.48%, but the Kosdaq advanced 0.38%.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.75% lower.

Australia CPI

Prices in Australia rose 6.1% in the second quarter compared to the same period a year ago, up from 5.1% in the first quarter of the year. Economists polled by Reuters saw inflation hitting 6.2%.

Kristina Clifton, an economist at Commonwealth Bank of Australia, wrote in a note before the announcement that the CPI reading Down Under could influence the market’s expectations for future rate hikes.

“We expect that any impacts on the AUD from today’s CPI will be short lived because the darkening global outlook will be a greater weight on AUD,” she wrote.

The International Monetary Fund on Tuesday cut its global GDP forecasts for 2022 and 2023. It now expects growth to come in at 3.2% this year, 0.4 percentage points lower than its April projection.

The Australian dollar weakened to $0.6926 after the inflation print was reported.

U.S. stocks slipped overnight after Walmart cut its earnings forecast.

The Dow Jones Industrial Average slipped 228.50 points, or 0.71%, to 31,761.54. The S&P 500 dipped by 1.15% to 3,921.05, while the Nasdaq Composite fell around 1.87% to 11,562.57.

The Federal Open Market Committee began its meeting on Tuesday stateside and will continue on Wednesday.

Expectations for a 75 basis point move were at 75.1%, according to the CME Group’s FedWatch Tool.

In corporate news, chipmaker SK Hynix reported 56% growth in operating profit to 4.2 trillion Korean won ($3.2 billion) in the second quarter of 2022 compared to a year ago. Revenue jumped 34% to 13.8 trillion won, helped by the “continued rise of the U.S. dollar,” the company said in a statement.

But SK Hynix predicted that memory demand would slow in the second half of the year because shipments of PCs and smartphones are expected to be lower than initial forecasts.

The company’s stock was last fell 1.69%.

Automaker Mitsubishi Motors and miner Rio Tinto are also set to report earnings.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 107.018, higher than Tuesday’s levels.

The Japanese yen weakened to 136.96 per dollar.

U.S. West Texas Intermediate crude futures were 0.23% higher at $95.20 per barrel, while Brent crude futures were flat at $104.40 per barrel.

— CNBC’s Tanaya Macheel, Sarah Min and Karen Gilchrist contributed to this report.

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