Hong Kong markets dip after whipsawing, Asia-Pacific markets rise

UBS raised its China growth forecast for 2022 following the latest slew of economic data that was released after a delay.

"We revise up 2022 full year GDP forecast to 3.2% from 2.7% previously given the unexpected Q3 strength," senior China economist Zhang Ning said in a note, adding that the outlook for 2023's growth remains around 4.5%.

"We think the upcoming Central Economic Work Conference (CEWC) in December will likely shed more light on the government's short-term policy undertaking, likely with a continued supportive stance," Zhang said in the note.

–Jihye Lee

HSBC shares dropped more than 4% after the bank reported a 42% decrease in pre-tax profit from a year ago.

Profit before taxes for the third quarter of this year was $3.15 billion, down from $5.4 billion a year ago. The decline in earnings was partially due to a $2.4 billion hit from the sale of its retail banking operations in France, the company said.

Net interest income grew to $8.58 billion from $6.61 billion. HSBC's stock was down 0.36% before the earnings report, and last traded more than 3% lower.

— Abigail Ng

Consumer prices in Singapore rose 7.5% in September from a year ago, unchanged from the increase reported in August and in line with expectations from analysts polled by Reuters.

Core inflation, which is the indicator watched by the local central bank, rose 5.3% in September from a year ago. That compares with the average analyst forecast of 5.2% in a Reuters poll, and the 5.1% reading in August.

— Abigail Ng

Japan's finance minister Shunichi Suzuki again refused to comment on whether authorities intervened in the currency market, according to a Reuters report.

Suzuki's repeated refusal to comment on the matter comes after speculation that a sharp strengthening on Monday morning followed another intervention reported by numerous media outlets, citing people familiar with the matter.

The minister was quoted as saying excessive volatility must be smoothed out, and that the government is ready to take appropriate actions when necessary.

"If we leave sharply volatile currency moves, driven by speculative trading, unattended, that would affect companies and households," Suzuki said.

 The Japanese yen was last slightly stronger at 148.84 per dollar.

— Abigail Ng

Chinese stocks may be overreacting in their sell-off following news that Chinese President Xi Jinping's core leadership team is now filled with loyalists.

"This early market reaction, while understandable, may be misguided," Teneo analysts said in a note.

"Close relationships with Xi notwithstanding, Li Qiang, Li Xi, and Cai Qi all enter the [Politburo standing committee] after heading up rich provinces where economic growth is still the top priority," the note said, referring to new members of the leadership team who have headed provinces such as Guangdong.

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— Evelyn Cheng

Hong Kong's Chief Executive John Lee said the government has been monitoring market moves closely to "ensure market order."

Commenting on Monday's trading session, he said, "volatility will be high, but our long-tested systems and response system are in operation all the time."

"Our monitoring of situation indicates that market activities have continued to go on in an orderly and smooth manner," he said.

"I would suggest investors to monitor the situation closely, assess the risks, and make careful decisions according to their own positions," he said, adding that his government is "confident that the systems we have in Hong Kong is effective, resilient, and will be monitoring the situation."

–Jihye Lee

Hong Kong's Hang Seng index briefly dropped more than 1.5% in early trade before rebounding back into positive territory.

The whipsaw comes a day after the HSI dropped more than 6% on Monday.

The Hang Seng Tech index lost close to 3% before gaining more than 2% in the first 20 minutes of trade.

–Jihye Lee

South Korea's President Yoon Suk-yeol is expected to deliver a budget speech at the National Assembly at 10 a.m. local time, according to a statement from his office.

Yoon's speech comes after the government in August released its first budget proposal of 639 trillion won ($444 billion) for 2023 – which is 6% smaller than this year's.

Investors will be watching for details on further measures to support the nation's economy.

The opposition Democratic Party is expected to boycott his speech.

–Jihye Lee

The Nikkei 225 in Japan added 0.8% in the first hour of the trading session and the Topix climbed 0.84%. In Australia, the S&P/ASX 200 was up 0.64%.

South Korea's Kospi hovered just under the flatline at the open before crossing into positive territory. It was last up 0.67%, and the Kosdaq gained 0.93.

The MSCI's broadest index of Asia-Pacific shares outside Japan ticked up 0.27%.

— Abigail Ng

China has become an "attractive market" for investors after stock valuations have fallen by more than 50% since 2021, according to one fund manager.

Foord Asset Management's Brian Arcese expects valuations to bounce back over the next 12 months as he believes the "regulatory overhang" facing Chinese stocks is "abating."

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— Ganesh Rao

Wall Street's top strategist Marko Kolanovic believes the sell-off in Chinese stocks is disconnected from fundamentals, presenting a buying opportunity.

"China growth data surprised positively over the weekend, but their equity market is selling off strongly today," JPMorgan's Kolanovic, the bank's chief global markets strategist, said in a Monday afternoon note.

"We believe this is a good opportunity to add given an expected growth recovery, gradual COVID reopening, and monetary and fiscal stimulus. 3Q and 4Q earnings should confirm fundamentals remain anchored in resilient labor markets and COVID reopening," Kolanovic said.

The Invesco Golden Dragon China ETF, which tracks the Nasdaq Goldman Dragon China Index, plunged 20% at its lowest level Monday after Beijing tightened President Xi Jinping's grip on power, souring investor sentiment for non-state-driven companies.

— Yun Li