Hong Kong stocks fall 2% on Covid fears; China keeps benchmark lending rates on hold

This is CNBC's live blog covering Asia-Pacific markets.

A man looks at his smartphone as he walks past the People's Bank of China building on May 20, 2022 in Beijing.
Jiang Qiming | China News Service | Getty Images

Shares in the Asia-Pacific mostly fell on Monday amid growing Covid concerns in China as its central bank kept the benchmark lending rates, or loan prime rates, on hold in line with expectations.

The Hang Seng index in Hong Kong fell 2.02% in its final hour of trade, leading losses in the wider region. In mainland China, the Shanghai Composite fell 0.39% to 3,085.04 and the Shenzhen Component also fell 0.411% to 11,134.47.

In Australia, the S&P/ASX 200 was 0.17% lower at 7,139.30. South Korea's Kospi dropped 1.02% to 2,419.50. The MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.29%.

The Nikkei 225 in Japan bucked the regional trend and was up 0.16% at 27,944.79 at the close, while the Topix gained 0.28% to 1,972.57.

Over the weekend, Malaysia's election produced a hung parliament, and parties are trying to win support from other blocs to form the government. Later this week, Baidu will report earnings and Singapore will release inflation data.

Malaysian voters lean to conservatism at weekend polls, analysts said

'Moderate Malays' will be taken aback by the Malaysian election results, says Najib's brother
'Moderate Malays' will be taken aback by Malaysia polls: Najib's brother

The absence of a clear winning coalition at Malaysia's elections over the weekend shows that politics in the country is changing, analysts said. While reforms to the long-ruling Barisan Nasional coalition were once popular, voters including youths are leaning towards more conservative and religious parties.

Oh Ei Sun, senior fellow at the Singapore Institute of International Affairs, told CNBC that the liberal opposition party Pakatan Harapan's "somewhat reformist image" was threat to some voters.

"I think it will be extremely difficult for PH, despite it having captured the most number of seats, to form or even to join a coalition government," Oh said. 

Former prime minister and long-time statesman Mahathir Mohamad's historic loss of his seat in Langkawi shows that politics in Malaysia are shifting, according to Better Malaysia Assembly advocate and brother of jailed former Prime Minister Najib Razak, Nazir Razak.

"That's extraordinary. I mean, that's like saying, you know, people are not voting for brands. They're voting for what you can deliver for them. So I think politics is changing," he told CNBC's "Squawk Box Asia" on Monday.

Read the full story here.

— Su-Lin Tan

Malaysia sees sell-off in 'sin' stocks after right-wing party wins more seats

Malaysia coalitions' party manifestos don't mention anything close to fiscal responsibility: Analyst
Malaysia needs higher taxes and should roll back subsidies: Maybank

Stocks related to gambling and alcohol consumption in Malaysia sold off on Monday after an Islamist party won more seats than it held before Saturday's election.

In the past, Parti Islam Se-Malaysia, or PAS, has made it very clear that it doesn't want gaming and alcohol in Malaysia, said Anand Pathmakanthan, head of regional equity research at Maybank Investment Banking Group.

Companies related to gambling, such as Magnum shares plunged 8%, while Genting lost 5.13% and Sports Toto shed 6.86%. Beer companies listed in Malaysia, including Carlsberg dropped around 5%, and Heineken declined more than 6%.

"The sin sectors remain at risk," said Pathmakanthan, though he said PAS's more radical policies may have been watered down.

"What we need now is clarity on how they're going to treat these sectors going forward with PAS now having a much bigger say," he said.

The broader benchmark index fell as much as 1.49% earlier, but was last 0.5% lower.

— Abigail Ng

Correction: This post was updated to show that Anand Pathmakanthan works for Maybank Investment Banking Group. An earlier version misstated the firm's name.

Oil prices drop as China faces Covid concerns, Goldman Sachs cuts forecast

Oil prices fell by nearly a dollar as Covid concerns in China rose with the nation seeing the first virus-related deaths recorded since May this year.

Brent crude futures shed less than a dollar, or 0.9%, to stand at $86.83 per barrel and U.S. West Texas Intermediate futures dropped 1.09% to $79.21 per barrel.

Goldman Sachs cut its forecast for Brent oil by $10 to $100 per barrel for the fourth quarter of 2022, citing dented China demand with rising Covid concerns and insufficient details from the latest Group of 7 nations' price cap on Russian oil.

"We believe the market has a right to be anxious about forward fundamentals," economists including Jeffrey Currie said in the note, adding the potential of further lockdowns in China is equivalent to the latest production cut by OPEC+.

— Lee Ying Shan

Hong Kong movers: Reopening and tech stocks drop as China reports Covid-related deaths

Hong Kong stocks related to reopening and technology dropped in Asia's morning session, dragging down the wider index, as China reported its first Covid-related deaths since May.

The nation also saw tightened Covid-related restrictions in some regions, including the capital Beijing.

Shares of Cathay Pacific fell 2.14%, Air China slipped more than 3%, China Eastern Airlines shed 2.52%. China Southern Airlines also lost more than 4%.

Casino operators MGM China plunged 6%, Wynn Macao declined nearly 7%, Sands China gave up more than 6% and Galaxy Entertainment lost about 6%.

Meituan's shares slipped 5.67% and shed 5.78%, while Alibaba lost 4.69%.

— Abigail Ng, Evelyn Cheng

Japan trading houses rise as Berkshire Hathaway reportedly boosts stake

Shares of some Japanese trading houses rose early in the Asia session, despite retreats in the region's markets, after billionaire Warren Buffett's Berkshire Hathaway boosted its stake in the firms, according to individual regulatory filings.

Berkshire raised its stake by more than 1 percentage point in Mitsubishi, Mitsui & Co, Itochu, Marubeni and Sumitomo to hold over 6% in each of the firms, the filings showed.

Japan-listed shares of Mitsubishi rose 1.89% in the morning session, Marubeni rose 2.12% and Sumitomo rose more than 1%. Itochu also rose 0.84% and Mitsui inched 0.16% higher.

This comes days after Berkshire Hathaway disclosed it increased its holdings of Taiwan Semiconductor Manufacturing Company's American depositary receipts, causing Taiwan-listed shares of the company to soar more than 10% in the Asia session.

— Jihye Lee

China keeps its loan prime rates on hold as expected

China left its benchmark lending rate unchanged for a third month in a row, according to an announcement from the People's Bank of China.

The one-year loan prime rate is steady at 3.65%, and the five-year rate is also on hold at 4.3%, the notice said.

— Abigail Ng

South Korea saw exports drop further in first 20 days of November

South Korea's exports for the first 20 days of November fell 16.7% on an annualized basis, with demand from China lagging, according to data from the customs agency.

The slump in exports is a sharp drop from the 5.5% fall seen in October compared to the same period a year ago.

Imports also dropped 5.5% for the first 20 days of November, resulting in a slight improvement in the trade deficit — $4.4 billion for the period, compared with a deficit of $4.9 billion reported in October.

The country has recorded a total of $40 billion in trade deficit year-to-date, statistics from the agency showed.

— Jihye Lee

CNBC Pro: Morgan Stanley's Mike Wilson predicts the S&P 500's bottom, calls it a 'terrific buying opportunity'

Morgan Stanley's Chief U.S. Equity Strategist Mike Wilson says we're in the "final stages" of the bear market, but the situation will remain challenging for a while longer.

He predicts when — and at what level — the S&P 500 will hit a "new low."

CNBC Pro subscribers can read more here.

— Weizhen Tan

China is expected to hold its benchmark lending rates steady, Reuters poll says

China's central bank is expected to keep its one-year and five-year loan prime rates on hold, according to analysts polled by Reuters.

The one-year rate currently stands at 3.65%, and the five-year LPR is at 4.3%.

The People's Bank of China last cut both rates in August.

China's offshore yuan was weaker at 7.1376 against the U.S. dollar ahead of the decision early Monday.

— Abigail Ng

CNBC Pro: Strategist says Chinese tech stocks, like Alibaba, are 'deeply undervalued'

This year's 30% decline in the value of Chinese Big Tech stocks, such as Alibaba, has made them "incredibly cheap," according to investment bank China Renaissance.

Its head of equities, Andrew Maynard, not only believes that the stock market appears to have bottomed, but also that investors may miss out on a rally if they remain underweight on China.

"Without a shadow of a doubt, being underweight China is going to cost you going forward," Maynard said.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Markets are watching for more clues on Fed hikes and the economy in the week ahead

Investors may be a bit more cautious in the week ahead, with stocks seeking direction in quiet trading and the bond market's warnings about recession getting louder.

The Thanksgiving holiday on Thursday should mean markets will likely be quiet Wednesday and Friday. Traders will be monitoring reports on Black Friday holiday shopping for feedback on the consumer.

"It's really a week where data dependence is the key phrase," said Julian Emanuel, senior managing director at Evercore ISI. "The bias [for stocks] is higher unless data continues to deteriorate and the Fed stays on its hawkish slant... which has clearly been reinforced in the last 48 hours."

Check out our full deep dive on what to expect in the week ahead here.

— Patti Domm, Tanaya Macheel