Asia-Pacific markets trade lower: Singapore inflation at 14-year high; Japan travel stocks rise

Visitors stands in front of an electronic ticker at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Monday, Nov. 30, 2020.
Toru Hanai | Bloomberg via Getty Images

Asia-Pacific markets traded lower on Tuesday after major indexes on Wall Street finished their worst day since June amid mounting rate hike concerns.

Hong Kong's Hang Seng index was down 0.78% in the final hour trade. The Shanghai Composite closed fractionally lower at 3,276.22 and the Shenzhen Component fell 0.404% to 12,455.15.

Japan's Nikkei 225 fell 1.19% to 28,452.75, and the Topix traded 1.06% lower to end the session at 1,971.44. South Korea's Kospi was down 1.1% at 2,435.34. S&P/ASX 200 declined 1.21% to 6,961.8.

Singapore's consumer price index climbed to 7% year-on-year, the highest level in 14 years, as food, electricity and gas prices rose. Global inflation is likely to stay elevated "for the next few months," the central bank said in a statement.

Overnight on Wall Street, the Dow Jones Industrial Average tumbled more than 600 points in its worst day since June, as the summer rally fizzled out and fears of aggressive interest rate hikes returned to Wall Street. The S&P 500 also tumbled 2%.

"There was a big hit to risk appetite in what was a night devoid of any top tier data. Instead markets are apprehensive ahead of US Fed Chair Powell's Jackson Hole speech," Tapas Strickland of National Australia Bank said in a Tuesday note.

U.S. stocks will be challenged in the next nine to 18 months, fund manager says

U.S. markets might suffer in the coming months as a result of quantitative tightening by the Fed, Mary Nicola of PineBridge Investments told CNBC's "Street Signs Asia."

It means the U.S. central bank will likely continue reducing its balance sheet, which lowers liquidity in financial markets.

The Fed has been removing cash from the system that was pumped into the economy when the pandemic first started, and is expected to continue to do so even if the pace of rate hikes slows.

Chinese policymakers need to act more 'decisively' as growth slows, says portfolio manager
China's policymakers should act more 'decisively,' says portfolio manager

"We've seen such a rapid response and such aggressive returns from the markets as a result of balance sheet expansion," the portfolio manager said. "Now that we're seeing a tightening … in balance sheet, that's where we're concerned about financial markets."

"Over the next nine to 18 months, you know, we think that equities are going to be challenged. So we've been taking a more cautious stance on equities overall and on risk assets."

— Abigail Ng

Singapore's July inflation rises at fastest pace in more than 14 years

Singapore's consumer price index in July rose 7% year-on-year, the highest in more than 14 years.

That's up from 6.7% in June, according to numbers released by the Monetary Authority of Singapore and Ministry of Trade and Industry on Tuesday.

July core inflation, which excludes accommodation and private transport, rose 4.8% year-on-year in July —up from 4.4% in the previous month.

The statement said the inflation uptick was mainly driven by stronger increases in the prices of food and utilities.

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"Global inflation is likely to stay elevated in the near term as key commodity markets continue to face supply constraints and labor markets in many major economies remain tight," MAS said.

Singapore said it expects core inflation to stay elevated over the next few months before ease toward year-end.

 The benchmark Straits Times Index was trading about 1% lower on Tuesday.

–Jihye Lee

Why UBS likes the Singapore dollar and Australian dollar

It's a matter of days or weeks before the Chinese yuan goes above 6.9 per U.S. dollar, says UBS
Matter of days or weeks before the yuan goes above 6.9 per U.S. dollar, says UBS

Asian currencies have priced in a global slowdown, and the Singapore dollar could benefit if a hard landing is avoided, according to UBS Global Wealth Management.

"I think there could be some relief on Asian currencies which have already moved quite a fair bit, and if you do want to position for the soft landing scenario, the Sing dollar is something that we like," Tan Teck Leng, APAC FX and macro strategist at the firm, told CNBC's "Squawk Box Asia."

He noted that Singapore's central bank uses the currency to address inflation and investors don't have to worry about the fundamentals of the Southeast Asian nation's economy.

Singapore's dollar last traded at 1.397 against the greenback.

The Australian dollar also looks "highly attractive" given the fundamentals, Tan said.

"We are highly aware of the risks, but again, on the China situation, we are of the view that it would not spiral into an uncontrolled growth deceleration," he said.

There is scope for the Australian dollar to rebound from current depressed levels and move toward $0.70 or $0.75 in the next six to 12 months, Tan predicted.

The Australian dollar last changed hands at $0.6889.

— Abigail Ng

Global chip market to grow slower than expected, report says

The global chip market is likely to grow slower than expected in this year and in 2023, according to estimates from industry organization World Semiconductor Trade Statistics.

The organization downgraded its forecasts from 16.3% to 13.9% in 2022, and from 5.1% to 4.6% in 2023.

The latest forecast for 2022, at $633 billion, is set to grow roughly $13 billion less than previously estimated in June.

Taiwan Semiconductor Manufacturing Company was trading 1.18% lower in the afternoon, and United Microelectronics Corporation also fell 2.15%. In South Korea, Samsung Electronics was down 1.5% and SK Hynix was 1% lower.

— Jihye Lee

Japan's travel stocks jump after the country reportedly considers easing Covid measures

Airline stocks in Japan rose following a Nikkei report that said the government is considering ending pre-arrival Covid test requirements for vaccinated travelers.

Japan Airlines rose 3.4% in the morning, while ANA Holdings was last 1.97% higher.

The report noted the easing is likely to take effect within a few weeks, adding that the country was mulling raising the cap on the number of arrivals that is currently limited to 20,000 tourists a day.

Japan's Chief Cabinet Secretary Matsuno Hirokazu on Tuesday spoke about 'lightened' border control measures, adding that they will be carried out in a "way to prevent Covid spread and aid economic activity." He declined to comment on specific timings of such measures.

— Jihye Lee

Tencent shares dip slightly after buying back 1.1 million shares

Tencent shares dropped slightly after the company bought back 1.1 million shares for $353.6 million Hong Kong dollars ($45 million), according to a filing to the Hong Kong exchange.

The company has bought back 12.6 million shares so far, which accounts for 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 posted its first-ever quarterly year-on-year revenue decline last week on stricter regulations surrounding gaming in the country.

Niko Partners' Lisa Hanson told CNBC's "Squawk Box Asia" that the lack of a gaming license is the main pressure weighing on Chinese gaming companies, such as NetEase and Tencent.

— Jihye Lee

CNBC Pro: Tech investor Gene Munster reveals why this FAANG stock can top $250

FANNG stocks have rallied strongly in the second half of the year, but tech investor Gene Munster believes one stock could still see further upside ahead.

He tells CNBC why he loves this stock for the "next two to five years."

Pro subscribers can read the story here.

— Zavier Ong

CNBC Pro: Morgan Stanley's top China stock picks to beat market volatility

Morgan Stanley has named a raft of Chinese stocks to help investors navigate what it expects to be a period of elevated market volatility.

The bank's picks span several sectors and have significant potential upside to their stock prices.

Pro subscribers can read the story here.

— Evelyn Cheng

Japan's manufacturing data shows slowest factory activity growth in 19 months

Japan's manufacturing activity growth slowed to a 19-month low, as new orders continue to decline.

The au Jibun Bank Flash Manufacturing Purchasing Managers' Index (PMI) fell to a seasonally adjusted 51.0 in August, down from July's final of 52.1.

The 50-point mark separates growth from contraction.

Manufacturers reported a second successive contraction in output levels — the steepest in 11 months, the survey showed. New order growth fell at the sharpest pace since September 2020.

The au Jibun Bank Flash Services PMI Index also slipped to a seasonally adjusted 49.2 in August from July's final of 50.3, contracting for the first time since March.

"Of concern was the amount of new business received by private sector firms, which reduced for the first time in six months and pointed to further weaknesses to come," said Usamah Bhatti, an economist at S&P Global Market Intelligence.

— Jihye Lee

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