Asia Stocks Down Amid Inflation Concerns, China Property Market Woes Remain

27/10/2021 Asia-pacific stock markets were down on Wednesday as investors remained concerned about the risk from elevated inflation and the indebted real estate sector in China. At the release of the data today, Australian core inflation hit a six-year high. CPI rose 0.80% QoQ, rose 3.0% YoY. Australia’s bond yields and currency climbed after core inflation beat estimates. Chinese authorities required China Evergrande Group’s founder Hui Ka Yan to use his personal wealth to alleviate the firm’s debts. Chinese regulators warned that other property developers in the country should make “active preparations” to meet payments on their offshore bonds. Debt problems in China’s property sector have become a global threat, with Modern Land becoming the fourth developer there to default on an overseas debt obligation. MSCI’s Asia ex Japan fell 0.77%, led by tech shares falling in Hong Kong. Tencent down -3.85%. Shares benchmarks also retreated in Japan, China and Australia.

The energy crunch continues to ripple across the global economy. Coal stockpiles at U.S. power plants plunged to the lowest in 24 years. WTI crude oil traded around $84 a barrel, Brent crude around $85.90 a barrel. Gold retreated back below $1,800 an ounce, steady at $1790 an ounce, and Bitcoin slipped to around $60,500.

Here are some events to watch this week:
• Earnings: Amazon, Apple, Samsung Electronics, China Vanke, PetroChina, Ping An Insurance Group
• Australia CPI, Wednesday
• U.S. wholesale inventories, U.S. durable goods, Wednesday
• Bank of Japan monetary policy decision, briefing, Thursday
• ECB rates decision, President Christine Lagarde briefing, Thursday
• U.S. GDP, initial jobless claims, Thursday
• G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday

LOCAL
The JSE tracked global counterparts in Europe and U.S. as investors cheered strong US corporate earnings. Investors are also betting on upbeat results from major tech companies this week. The All-share index 0.95% to 67,615 points and the bluce-chip Top-40 closed 0.96% higher. Industrials added 1.47%, financials 0.89% and banks 0.80%. Sibanye-Stillwater rose 2.75% to R53.21 after it announced a $1bn (R14.8bn) deal to acquire two Brazilian mines, its fourth and largest investment yet in its push to build a portfolio of metals critical to electric vehicles. The share price rose 2.74% to R53.21. The rand uneasy at R14.86/$. Top-40 futures on the backfoot -424 points, IG markets.

Woolworths Group shares tumble 4.1%, the most since April 29, after the retailer reported sales from continuing operations for the first quarter of A$16.07 billion vs. A$17.88 billion y/y.

EX DIV: BAWP SJ @ 6c, CAT SJ @ 50c, ET SJ @ 33c, PRX SJ @0.14c, RCL SJ @ 30c

NEWS:
• BioNTech to Start Building Vaccine Plant in Africa Next Year
• Ex-AngloGold Chair Says He Quit as Listing Discord Rocked Board
• Citi, Standard Bank in Rare Debt Deal for Africa Solar Firm
• South African Court Vetos Zuma Bid to Fire Case Prosecutor
EQUITY PREVIEW:
• Sibanye Buys Brazil Mines in $1 Billion Battery Metals Push
• Absa Project Pipeline Lifted by Africa Free Trade Opportunities
• AngloGold’s Colombian Quebradona Permit Application Hits Snag
MEDIA SUMMARIES:
• Fin24: SAA’s controversial new partner is also linked to the Kelvin power station
EARNINGS:
• Famous Brands Ltd. (FBR SJ)
• Irongate Group (IAP AU)
CORPORATE EVENTS:
• Earnings Calls: FBR SJ, IAP AU

EU/UK/US
European shares jumped on Tuesday as strong earnings from Facebook, overnight, were augmented by solid results from UBS and Reckitt Benckiser. The pan-European Stoxx 600 rose 0.8%. Germany’s DAX gained 1.0%, alongside France’s CAC-40 firming up 0.8%. Rising inflation expectations kept bond yields elevated, helping the European banks sector add 0.4%. UBS rose after posting better-than-expected 9% increase in third quarter net profit. Cleaning products maker Reckitt Benckiser jumped 6% after it raised its full-year forecast and beat estimates for third-quarter sales. Logitech International slumped 4.3% after it confirmed full-year earnings outlook and warned of supply chain disruptions. The FTSE100 futures on the backfoot -10 points, alongside Dax futures sliding -51 points this morning.

The S&P 500 rose for a second day to a fresh record, building on its strongest start to earnings season. The benchmark inched up 0.2%, the Dow pretty flat 0.04%, alongside the Nasdaq 0.06% marginally up. Facebook shares were in the red after posting earnings that topped expectations but fell short on both revenue and monthly active users. Alphabet posted better-than-expected quarterly profit and revenue figures, Twitter said Apple privacy changes had made less of an impact on third-quarter earnings than initially expected, and Microsoft beat on revenues thanks to strong demand for its consumption-based cloud services. Elsewhere, according to the Department of Commerce, new home sales surged in September; up 14% versus the 1.5% increase expected by economists. Dow futures pretty flat 0.02%, S&P500 futures 0.03%, Nasdaq futures 0.01%.

ASIA
Japan’s Nikkei declined on as investors turned cautious ahead of lower house elections on Sunday that could drain support for the country’s new prime minister. Earnings were also in focus: Canon and Nidec slid after disappointing earnings, while Shinko Electric Industries and Shimano led gains on the Tokyo bourse after upwardly revising their outlooks. The Nikkei dropped 0.52%. Australian shares erased early gains, hit by losses in mining and gold stocks as commodity prices came under pressure and a sharp fall in Woolworths Group, while high inflation data also weighed on sentiment. The S&P/ASX 200 index was down nearly 0.3%. Hong Kong shares down on Wednesday, dragged by tech and property firms. A planned pilot real-estate tax scheme continued to dent risk appetite. The Hang Seng index fell 1.52, while China’s blue-chip CSI 300 was down 1.25%.