U.S. stocks face challenges in next 9-18 months, fund manager says
Mary Nicola of PineBridge Investments told CNBC’s “Street Signs Asia” that U.S. markets could be affected by the Fed’s quantitative tightening in the coming months.
That means the U.S. central bank is likely to continue shrinking its balance sheet, reducing liquidity in financial markets.
The Fed has been withdrawing cash from the system it injected into the economy at the start of the pandemic and is expected to continue to do so even as the pace of rate hikes slows.
“We’ve seen such a quick response and such strong market returns due to the expansion of the balance sheet,” the portfolio manager said. “Now we’re seeing a tightening of the balance sheet … that’s where we worry about financial markets.”
“You know, over the next nine to 18 months, we think equities are going to be challenged. So we’ve been taking a more cautious stance on equities overall and risk assets.”
— Abigail
Singapore’s July inflation rises at fastest pace in 14 years
Singapore’s consumer price index rose 7% in July from a year earlier, the highest in more than 14 years.
That was up from 6.7 percent in June, according to data from the Monetary Authority of Singapore and the Ministry of Trade and Industry released on Tuesday.
Core inflation, which excludes accommodation and private transportation, rose 4.8% year-on-year in July, up from 4.4% the previous month.
The increase in inflation was mainly due to strong increases in food and utility prices, the statement said.
“Global inflation is likely to remain elevated in the near term as major commodity markets continue to face supply constraints and labor markets remain tight in many major economies,” MAS said.
Singapore said it expects core inflation to remain elevated for the next few months before slowing by the end of the year.
The benchmark Straits Times Index fell about 1 percent on Tuesday.
– Wisdom Lee
Why UBS likes the Singapore dollar and the Australian dollar
UBS Global Wealth Management said Asian currencies have already priced in a global slowdown and the Singapore dollar could benefit if a hard landing is avoided.
“I think there may be some relief in Asian currencies that are already volatile, and if you do want to prepare for a soft landing scenario, we like the Singapore dollar,” Tan Teck Leng, macro strategist at APAC FX and the firm told CNBC’s ” Squawk Box Asia”.
He pointed out that the central bank of Singapore uses the currency to fight inflation, and investors don’t have to worry about the fundamentals of the Southeast Asian nation’s economy.
The Singapore dollar was last at 1.397 against the US dollar.
The Aussie also looks “extremely attractive” given the fundamentals, Tan said.
“We are highly aware of the risks, but again, with regard to the situation in China, we don’t think it’s going to get caught up in an uncontrolled growth deceleration,” he said.
Tan predicts that the Aussie has room to rebound from its current lows and rise to $0.70 or $0.75 in the next six to 12 months.
The Australian dollar last changed hands at $0.6889.
— Abigail
Global chip market grows slower than expected, report says
The global chip market is likely to grow at a slower pace this year and into 2023 than expected, according to estimates from industry group World Semiconductor Trade Statistics.
The organization lowered its 2022 forecast to 13.9% from 16.3% and 2023 from 5.1% to 4.6%.
The latest forecast for 2022, at $633 billion, is expected to be about $13 billion less than the previous estimate in June.
TSMC fell 1.18% in the afternoon, and UMC also fell 2.15%. In South Korea, Samsung Electronics fell 1.5% and SK Hynix fell 1%.
— Li Zhihui
Japan’s travel stocks rise after reports that Japan considers easing of Covid measures
Japanese airline stocks rose after the Nikkei reported that the Japanese government was considering ending pre-arrival Covid testing requirements for vaccinated travelers.
Japan Airlines rose 3.4% in early trade, while ANA Holdings was last up 1.97%.
The easing policy could take effect within weeks, the report noted, adding that the country was considering raising the cap on arrivals currently limited to 20,000 tourists a day.
Japan’s Chief Cabinet Secretary Hirokazu Matsuno on Tuesday spoke of “relaxing” border control measures, adding that they would be carried out “in a way that prevents the spread of the coronavirus and helps economic activity.” He declined to comment on the timing of such measures.
— Li Zhihui
Tencent shares dip slightly after repurchasing 1.1 million shares
Tencent shares fell slightly after the company bought back 1.1 million shares for HK$353.6 million ($45 million), according to filings with the Hong Kong exchange.
So far, the company has repurchased 12.6 million shares, or 0.13% of the company’s share capital, according to the filing.
Tencent shares were last down 0.45%.
The move comes after the $370 billion Chinese tech giant reported a year-over-year drop in quarterly revenue for the first time last week as the country tightened regulations around gaming.
Lisa Hanson of Niko Partners told CNBC’s “Squawk Box Asia” that the lack of gaming licenses is a major pressure on Chinese gaming companies such as NetEase and Tencent.
— Li Zhihui
CNBC Pro: Tech investor Gene Munster reveals why this FAANG stock could top $250
FANNG stock rose strongly in the second half of the year, but tech investor Gene Munster believes a stock has room for further upside ahead.
He told CNBC why he likes the stock “for the next two to five years.”
Professional subscribers can read the story here.
— Xavier Ong
CNBC Pro: Morgan Stanley picks Chinese stocks for market volatility
Morgan Stanley has listed a range of Chinese stocks to help investors navigate the period of heightened market volatility it expects.
The bank’s picks span multiple sectors, and its share price has huge potential upside.
Professional subscribers can read the story here.
— Evelyn Cheng
Japanese manufacturing data shows slowest factory activity growth in 19 months
Growth in Japanese manufacturing activity slowed to a 19-month low as new orders continued to fall.
The au Jibun Bank flash manufacturing purchasing managers’ index (PMI) fell to a seasonally adjusted 51.0 in August from a final reading of 52.1 in July.
50 points is the dividing line between growth and contraction.
Manufacturers reported a second straight contraction in output levels – the worst in 11 months, the survey showed. Growth in new orders posted the biggest drop since September 2020.
The au Jibun Bank Flash Services PMI index also slipped to 49.2 in August from a final 50.3 in July, the first contraction since March.
“It’s concerning that new business received by private sector companies fell for the first time in six months and suggests further weakness ahead,” said Usamabati, an economist at S&P Global Market Intelligence. “
— Li Zhihui
