Trade of the Day: Asian stocks and US stock futures slide; yen and gold underpinned by safe-haven bid
Quote of the Day: “We agree with financial market and analyst expectations that rates will be cut by another 25bp at the conclusion of the Reserve Bank of India’s (RBI’s) policy meeting on Thursday 5th December. But with the effect of past stimulus likely to be felt gradually over the coming months and the inflation backdrop set to turn more difficult, we are firmly non-consensus in expecting modest rate hikes by the end of next year. We think that the 10-year yield will jump to 7.5% by the end of 2020, from around 6.5% currently,” said Shilan Shah, economist at Capital Economics.
Stock of the day: China Agri-Industries rose 29% to HK$4.09 after trade was resumed in the shares. During the trading halt China’s state-owned COFCO had announced plans to buyout and privatize the company by offering existing shareholders HK$4.25 per share in a $1.2 billion bid.
Number of the Day: 47-48 trillion yuan. Standard Chartered Bank’s 2020 forecast for gross issuance of bonds in China. This compares with 44 trillion in 2019 and includes both government and private sector issuance.
Tip of the Day: Toshiba has been upgraded to Buy from Underperform by Jefferies and has raised its price target to 4,610 yen from its earlier target of 2,620 yen. This implies a 21% rise from Thursday’s closing price.
Risk appetite in Asian markets soured after US President Donald Trump’s approval of legislation supporting the pro-democracy protesters in Hong Kong, triggering fears of retaliation from Beijing. The US and China are locked in a bitter trade war that has dislocated supply chains and hit economic growth across the world and Trump’s ascent is seen attracting a strong response from China. “We urge the US to not continue going down the wrong path, or China will take counter-measures, and the US must bear all consequences,” China’s Ministry of Foreign Affairs said in a statement.
MSCI’s Asia ex-Japan index fell 0.3%, Japan’s Nikkei index eased 0.12% and the Hang Seng index was down 0.22%. Telecoms, Consumer cyclicals and energy stocks were the main drag on Hong Kong’s index, although the technology sector’s outperformance, led by e-commerce behemoth Alibaba, provided some relief. Alibaba is now the largest company on the Hong Kong exchange both by market capitalization and daily turnover. It rose 5.6% on Thursday and has gained 16% from its offer price last week. US markets are shut for the Thanksgiving holiday but futures indicate selling pressure when trading resumes.