Tag: Asia Economy

Japan’s Shigeru Ishiba suggests he intends to stay on as PM after ruling coalition loses majority

Shigeru Ishiba, Japan’s prime minister and president of the Liberal Democratic Party (LDP), at the party’s headquarters following the lower house election, at the party’s headquarters in Tokyo, Japan, on Sunday, Oct. 27, 2024.

Bloomberg | Bloomberg | Getty Images

Japanese Prime Minister Shigeru Ishiba on Monday signaled that he intends to continue running the government after his Liberal Democratic Party and its coalition partner Komeito lost a majority in the lower house following a snap election.

“We will continue to advance national politics in a steady manner,” Ishiba said at a news conference at party headquarters in Tokyo, according to local news. “National politics cannot stagnate for even one moment.”

Ishiba promised to work on an economic stimulus package, and added that the party needs to recognize the reasons behind the oppositions’ gains.

Japan’s ruling coalition lost its parliamentary majority after voters cast their ballots on Sunday to determine control of the lower house. The election marked the first time since 2009 that the LDP has lost its majority.

“Our party fought hard all over the country under the slogan ‘Protect Japan, Turn growth into strength,’” the LDP said in a statement. “However, the party was unable to dispel the public’s distrust over the political funding issue, resulting in a harsh result.”

In various media interviews as votes were being counted, Ishiba had said: “We will humbly and solemnly accept the harsh judgment.”

After markets opened on Monday, Japan’s benchmark Nikkei 225 rose 1.79%, leading gains in Asia, while the Topix was up 1.38%. The moves were supported by a weaker yen, which fell 0.65% to trade at 153.28.

Ishiba succeeded Fumio Kishida as prime minister on Oct. 1 and called for a snap general election on Sept. 30 after winning the party’s internal vote against rival Sanae Takaichi.

The LDP’s election campaign has been dogged by concerns over inflation, as well as corruption scandals which have divided the party. When a slush fund scandal came to light in 2023, four cabinet ministers, as well as other senior party officials, were replaced by former PM Kishida.

On the campaign trail, Ishiba had vowed to reduce the burden on households suffering from rising living costs and showed intentions to boost rural revitalization, as Japan’s countryside suffers from a broader demographic crisis and an aging population.

David Roche, a strategist at Quantum Strategy, said Ishiba is now a “dead man walking” with his Liberal Democratic Party “very likely to lose power completely or see its power very diluted in a messy coalition after an even messier protracted period of haggling.”

“What is sure is that policy uncertainty will rule while the haggling goes on,” he said in a flash research note Sunday night, predicting the yen to weaken from here.

“Equities will mark time (the bull period is over anyway). JGBs [government bonds] will stagnate waiting to learn about the next bout of futile fiscal largesse or lack of it,” he added.

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October 28, 2024
China threatens Taiwan with more trade measures after denouncing president’s speech

A view of the cityscape ahead on Jan. 12, 2024, in Taipei, Taiwan.

Annice Lyn | Getty Images News | Getty Images

China is studying further trade measures against Taiwan, the Ministry of Commerce said on Saturday, two days after Beijing slammed a speech by Taiwan President Lai Ching-Te.

The Democratic Progressive Party, Taiwan’s ruling party, has not taken any practical measures to lift “trade restrictions” on mainland China, the commerce ministry said in a statement on its official website.

“At present, relevant departments are studying further measures based on the conclusions of the investigation into trade barriers from Taiwan (against mainland China),” it added.

China, which views democratically governed Taiwan as its own territory, detests Lai as a “separatist”. Lai and his government reject Beijing’s sovereignty claims, saying only Taiwan’s people can decide their future.

On Thursday at his keynote national day speech, Lai said the People’s Republic of China had no right to represent Taiwan, but that the island was willing to work with Beijing to combat challenges like climate change, striking both a firm and conciliatory tone, drawing anger from China.

The Saturday announcement from China’s commerce ministry could portend tariffs or other forms of economic pressure against the island in the near future.

China’s Taiwan Affairs Office, which on Thursday said that Lai’s speech promoted “separatist ideas” and incited confrontation, responded to the announcement by saying the fundamental reason behind the trade dispute was the “DPP authorities’ stubborn adherence to the stance of ‘Taiwan independence’”.

“The political basis makes it difficult for cross-Strait trade disputes to be resolved through negotiation,” it added.

In May, China reinstated tariffs on 134 items it imports from Taiwan, after Beijing’s finance ministry said it would suspend concessions on the items under a trade deal because Taiwan had not reciprocated.

The Cross-Strait Economic Cooperation Framework Agreement (ECFA) between China and Taiwan was initially signed in 2010 and Taiwanese officials had previously told Reuters that China was likely to pressure Lai by ending some of the preferential trading terms within it.

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October 12, 2024
Anand Rathi Wealth: Plenty of Indian household money sitting on the sidelines

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Feroze Azeez from Anand Rathi Wealth, discusses the issues barring the financial deployment of household savings in India, as well as some of the long-term challenges that Indian banks could face.

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October 3, 2024
China’s stimulus rally has already sent stocks up 25%. And there could be more to come

SHANGHAI, CHINA – MARCH 7, 2023 – The Oriental Pearl Tower, Shanghai Tower, Jinmao Tower and World Financial Center are seen on Lujiazui Street, Shanghai, China, March 7, 2023.

Future Publishing | Future Publishing | Getty Images

China stocks will keep rising after markets in the mainland reopen following the Golden Week break, analysts predicted.

Beijing’s announcements of economic support last week have fueled China’s CSI 300 blue-chip index to rally over 25% in a nine-day winning streak. It popped over 8% on Monday to their best day in 16 years, before the markets were closed for a week-long holiday.

Then, Hong Kong stocks dropped on Thursday, ending a 6-day winning streak and sparking fears that China’s stimulus rally could have started to fizzle out.

Now, one question on investors’ minds is how long will the rally last?

In China, it could continue for an extended period after the mainland markets come back online next Tuesday, said Eugene Hsiao, Head of China Equity Strategy at Macquarie Capital, who viewed the decline in Hong Kong on Thursday as “short-term profit taking given the sharp rise” a day prior.

Beijing’s recent stimulus blitz coupled with higher participation from retail investors will likely fuel a longer rally, he said.

The rally could even continue through the end of the year, said Shehzad Qazi, chief operating officer at China Beige Book International.

But it faces the risk of “an ugly reversal in sentiment into 2025,” Qazi said, if markets get disappointed with the impact of the stimulus measures, which in my view are not enough to address China’s structural economic problems.

Investors expect the stimulus measures to “produce blockbuster growth” to the economy in the coming months, and investor enthusiasm will dampen if the package only delivers a “modest lift,” Qazi added.

Shaun Rein, founder of China Market Research, predicted that “there’s still 1-3 weeks room left for Chinese equities to keep going up.” Still, it’s not unusual for prices to drop as “investors close out positions to take wins,” Rein said. Given the rally was driven by mostly sentiment, there will likely be more volatility ahead as “no one wants to be the last in, but no one wants to be the last out.”

More individual investors have been incentivized to join trading, “in fear of missing a seemingly once in a lifetime rally”, Ting Lu, Nomura’s chief China economist said in a report on Thursday.

Fiscal stimulus in focus

Also boosting the sentiment is soaring hopes that Beijing will unleash more fiscal policies and other support measures to shore up its economy. The Ministry of Finance has yet to release major policies to support growth, despite reports of such plans.

“The eventual scale and content of the fiscal package might be quite improvised and uncertain,” Nomura’s Lu noted in the report, adding that investors should exercise “more sober assessment” amid the recent market frenzy.

The rally in equity could be derailed if the central government’s fiscal stimulus package misses expectations, according to Macquarie Capital’s Hsiao. Other events that might cut the rally short include “stronger than expected U.S. job numbers implying smaller Fed rate cuts, or a Trump victory in November,” he said.

China has struggled with looming deflationary pressures due to a prolonged real estate downturn and weakening domestic consumer confidence. A slew of economic data in recent months has missed expectations, raising worries among economists that the world’s second largest economy may not achieve its 5% full year growth target.

We haven’t moved into this world where fiscal has become the dominant driver, and so that’s what we’re really looking for.

Alexander Cousley

Investment strategist, APAC, Russell Investment

Last week, the People’s Bank of China moved to lower the amount of cash that banks must hold on hand, known as the reserve requirement ratio or RRR, by a half-percentage point. The central bank also cut the benchmark interest rate on seven-day reverse repurchase agreements by 20 basis points to 1.5%.

The key focus will be on the effectiveness of further stimulus measures, said Billy Leung, investment strategist at Global X. “If policy follow-through is strong, we could see further gains, backed by a broader base of investor participation.”

Speaking on CNBC’s “Street Signs Asia,” Alexander Cousley, an APAC investment strategist at Russell Investments, pointed out that certain policies have been slightly lacking — “we haven’t moved into this world where fiscal has become the dominant driver, and so that’s what we’re really looking for,” he said.

“The thing that I do worry about, I think most at Russell do worry about, is that we are still in this period where Chinese authorities respond to weakening data, and the thing starts to improve a little bit, and we don’t see the actual follow through,” said Cousley.

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October 3, 2024
China property stocks surge to highest levels in a year as stimulus rally continues

SHENZHEN, CHINA – MARCH 09: View of high commercial and residential buildings on March 9, 2016 in Shenzhen, China. General economic slowdown continues in China while the property price and stock bubble faces risk. (Photo by Zhong Zhi/Getty Images)

Zhong Zhi | Getty Images News | Getty Images

Shares of most Hong Kong-listed Chinese property stocks surged to their highest levels in over a year, as China’s stimulus rally continues.

The real estate sector was the biggest gainer in the Hang Seng Index, with Longfor Group Holdings being the top mover, adding over 25%.

Shares of other real estate developers also saw significant gains. Shimao Group skyrocketed over 87% while Kaisa Group jumped 40.48%, both notching their highest prices in more than a year.

Similarly, China Overseas Land & Investment climbed 12.31% to hit its highest since last September. China Vanke rose 39.6% to its highest since August 2023.

Hang Lung Properties and China Resources Land gained 10.01% and 10.82% respectively.

The wider Hang Seng Index added 6%, while the Hang Seng Mainland Properties Index surged over 14%. Mainland Chinese markets are closed for the Golden Week holiday.

The continued drag from the property sector will leave a sizable shortfall in demand behind, keeping growth below target.

Over the weekend, major cities in mainland China introduced easing measures to enhance homebuyer confidence, following a series of policy stimulus initiatives from the central bank last Tuesday.

Guangzhou’s city government announced that all restrictions on home purchases would be removed starting Monday. Shanghai’s reduction of the required tax-paying period also came into effect on Tuesday. Shenzhen has also relaxed purchasing restrictions, allowing buyers to purchase one more apartment in select districts.

While these measures will help stabilize the property market, lifting prices and reviving demand will be a tall order, Morgan Stanley wrote in a note published Wednesday.

“The continued drag from the property sector will leave a sizable shortfall in demand behind, keeping growth below target,” the investment bank’s Asia-Pacific economists wrote.

Real estate used to account for over 25% of China’s GDP, but it has faced a prolonged decline since 2020 following Beijing’s crackdown on the sector’s excessive debt.

Chinese officials have ramped up support to alleviate financial pressures on households and stabilize the embattled real estate market. However, these previous initiatives have not resulted in significant turnarounds.

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October 1, 2024
Asia-Pacific markets fall as investors monitor Middle East tensions; Japan’s Nikkei down 1.5%

A MLB store in the Myeongdong shopping district in Seoul, South Korea, on Saturday, March 9, 2024.

Bloomberg | Bloomberg | Getty Images

SINGAPORE — Asia-Pacific markets opened lower Wednesday morning, following a poor start to the trading month on Wall Street that saw major indexes fall amid rising Middle East tensions.

Australia’s S&P/ASX 200 opened down 0.2%, while Japan’s Nikkei 225 started the trading day lower by 1.5%. South Korea’s Kospi fell 1% at the open, while the small-cap Kosdaq was down 0.8%.

Hong Kong’s Hang Seng index futures were at 20,768, lower than the HSI’s last close of 21,133.68. Markets in Mainland China were closed Wednesday and will remain closed for the rest of the week due to the Golden Week holiday.

Traders in Asia were assessing data on consumer inflation out of South Korea. The country’s consumer price index rose 1.6% in September from a year earlier, data showed Wednesday morning, missing expectations by economists polled by Reuters who expected a rate of 1.9%.

In the U.S. overnight, the Dow Jones Industrial Average fell more than 173 points, while the S&P 500 and Nasdaq Composite dropped 0.93% and 1.53%, respectively. Oil prices and the CBOE Volatility Index (.VIX) jumped as Iran fired ballistic missiles at Israel. The attack followed Israel’s start of a ground operation into Lebanon as tensions escalated with Iran-backed militant group Hezbollah.

Israeli Prime Minister Benjamin Netanyahu said Iran’s missile attacks had failed and vowed retaliation. “Iran made a big mistake tonight — and it will pay for it,” he said, according to NBC News, adding “the regime in Iran does not understand our determination to defend ourselves and our determination to retaliate against our enemies.”

—CNBC’s Brian Evans and Alex Harring contributed to this report.

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October 1, 2024
Japan faces labor shortages and demographic crisis as elderly population hits record high

People crossing street in Tokyo’s busy Akihabara downtown area

Leopatrizi | Istock | Getty Images

Japan commemorated its “Respect for the Aged Day” earlier this week, with the national holiday underscoring a somewhat problematic fact — the country has a record number of elderly citizens to celebrate.

Government data released ahead of the event showed that Japan’s population aged 65 and over had risen to an all-time high of 36.25 million.

While the country’s overall population has been declining, the segment of those aged 65 and above has grown to 29.3% of the population, the highest share of any country, according to the Statistics Bureau of the Ministry of Internal Affairs and Communications.

According to Robert Feldman, chief economist at Morgan Stanley MUFG Securities, the data fuels further concerns about demographic shifts and a labor crunch in the country.

A survey from Teikoku Databank last month showed that 51% of companies across sectors in Japan feel there is a shortage of full-time employees.

“The labor shortage is just as bad as ever,” said Feldman, noting that it’s especially felt in labor-intensive industries such as food service.

Meanwhile, 2023 saw the number of Japan’s workers aged 65 and over rise for a 20th consecutive year to reach a record 9.14 million, Statistics Bureau data showed.

Feldman warned that as these elderly workers begin to retire from the workforce, there won’t be the same number of young workers stepping up to replace them.

No one-size-fits-all solution

Based on recent trends, Japan’s proportion of elderly people is expected to continue to rise, hitting 34.8% in 2040, according to the National Institute of Population and Social Security Research.

Meanwhile, a recent research note from Morgan Stanley’s Feldman estimated that based on past demographic trends, the total labor force could drop from about 69.3 million in 2023 to about 49.1 million in 2050.

The Japanese government has recognized the economic and societal harms that could result from these trends and has taken steps to counter them.

Several measures have been aimed at reversing the country’s declining birth rates, with Prime Minister Fumio Kishida’s office rolling out policies such as providing more funds for child-rearing and support for more child-care facilities in the country.

Local governments have even taken steps to support public dating apps that are aimed at getting Japanese people to mingle, marry and have children.

Boosting birth rates, however, will do little to solve labor shortages in the short term. So, Japan has been steadily opening up to more migration over recent years, hitting a record 2 million foreign workers in 2024 and eyeing up to 800,000 more over the next five years, according to local media reports.

Replacing expected demographic losses in the country over the next couple of decades will require the country to add foreign-born workers at a much faster rate, in the tens of millions, according to Feldman.

“I don’t think that’s going to happen, which means that a large portion of that drop in the domestic labor force has to be made up by better productivity of those young people who will remain,” Feldman said.

Creating this productivity growth amongst workers will require more capital to invest into workers’ productivity and the implementation of new technologies such as AI and automation, he added.

Earlier this year, Carlos Casanova, senior economist for Asia at UBP, told CNBC’s “Squawk Box Asia,” that AI technology has often been cited as the solution to Japan’s demographic crisis but had so far done little to mitigate it.

“We have a society that is increasingly consumer oriented, so you do want to have a big workforce that is making money and that is spending money in order to sustain economic momentum,” Casanova said.

“AI can be part of the solution, but there are other things that they have to do,” he added, suggesting in addition to immigration, the country works on social and structural changes such as increasing the female workforce participation rate.

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September 17, 2024
India’s central bank chief plays down fears of a deposit crunch

Despite widespread bullishness on India, with its stock market highs and healthy bank balance sheets, a shortage of deposits is causing some uneasiness in the country’s financial sector.

Speaking to CNBC in an exclusive interview, Reserve Bank of India (RBI) Governor Shaktikanta Das discussed the issue of slowing growth in bank deposits underperforming an expansion in loans.

There is not cause for concern currently, Das said, but there could be trouble ahead if the situation persists.

“So there is a gap of 350 to 400 basis points,” he said, referencing the difference between credit and deposit growth. Annual figures from August put loan growth at 13.6% with deposit growth at 10.8%, according to Reuters.

“If it persists, then naturally the ability of the banks to continue their lending will get affected,” Das added in the interview Friday.

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When lending outpaces deposits, net interest margins — or the difference between what a bank earns on loans and pays out for deposits — take a hit. This could have ramifications for share prices, with many global institutional investors owning shares in Indian banks. In severe cases, it can lead to liquidity issues for banks if they have trouble meeting withdrawal demands.

Das noted that the loans could be being deposited elsewhere, remaining in the banking system, and wouldn't be drawn on the money that might be finding its way into potentially riskier investments, such as debt funds or equity markets.

"If people are going into the capital markets, it is their decision ... we have nothing to say on that," he said.

Das added that there was scope for banks to increase their deposits, however. "I am happy to note that most of the banks are today really working on their drawing boards, and they are working on coming out with new products for deposit mobilization."

Speaking on the same subject, Ashish Gupta, CIO at Axis Mutual Fund, said he sees a muted earnings picture for Indian banks compared to the last two years — partly due to this credit-deposit gap.

"I think that is clearly going to be visible. You will see earnings growth for the banks slow down," he told CNBC's Street Signs Asia."

He backed the view that deposit growth would be slower compared to the last couple of years, and highlighted that future rate cuts by the RBI would also have a negative impact on banks' profit margins.

How to invest in India, the world's fastest-growing major economy

India's GDP slowed to 6.7% in the second quarter compared to last year's 8.2%, piling pressure on the central bank to reverse a recent hiking cycle. Markets are currently pricing in a near-95% chance of a rate cut at the RBI's December meeting, with less conviction for the next meeting in October. Das highlighted there will be new members of the Monetary Policy Committee at its October meeting.

"We will discuss and decide in the MPC, but so far as growth and inflation dynamics are concerned, two things I would like to say. One, the growth momentum continues to be good, India's growth story is intact and, so far as inflation outlook is concerned, we have to look at the month-on-month momentum," he said.

He said the decision whether or not to cut rates in October will be based on that.

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September 16, 2024
Axis AMC CIO: Banking earnings to “be more muted” this year

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Ashish Gupta, CIO at Axis Mutual Fund sees a pickup in Indian IPOs in response to increased demand to invest in the Indian market, but a more muted earnings picture for banks as the Reserve Bank of India looks to cut rates in 2024.

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September 15, 2024
Hong Kong stocks fall as investors digest China economic data, await Fed rate verdict

A man walks along The Bund during the passage of Typhoon Bebinca in Shanghai on September 16, 2024. The strongest storm to hit Shanghai in over 70 years made landfall on September 16, state media reported, with flights cancelled and highways closed as Typhoon Bebinca lashed the city with strong winds and torrential rains.

Hector Retamal | Afp | Getty Images

Asian markets opened mixed Monday, with Hong Kong stocks falling as investors assessed downbeat economic data from China, while several key markets were closed for holidays.

Hong Kong’s Hang Seng index fell 0.76% on open, after China released a slew of worrying economic data over the weekend, with August factory output, retail sales and investment numbers missing expectations. Urban jobless rate rose to a six-month high while year-on-year home prices fell at their fastest pace in nine years.

Investors also await the Federal Reserve’s policy meeting on Tuesday and Wednesday where the central bankers are expected to make their first interest rate cut since 2020

Australia’s S&P/ASX 200 rose 0.44% on open. The Taiwan Weighted Index edged up slightly.

Markets in mainland China and South Korea were closed for Mid-Autumn festival. Japan markets were closed for Respect for the Aged Day.

Typhoon Bebinca has led to cancellation of hundreds of flights in China and Shanghai is expected to be hit by the strongest storm since 1949.

Asian investors also await a swath of key data and central bank decisions from the region.

Japan’s inflation is expected to tick higher in August, according to a Reuters poll, backing the case for the Bank of Japan to stay hawkish as the board sets its policy on Friday.

The central bank is anticipated to keep the rate unchanged while signaling that further rate hikes were in the offing.

The Japanese yen strengthened Monday morning to trade at 140.49 against the greenback. If the yen holds these levels, the currency will close at its strongest in more than a year.

China is poised to set its one- and five-year loan prime rates on Friday. The one-year rate, which affects most new and outstanding loans, is currently at 3.35%, while the five-year rate, that influences the pricing of mortgages, is currently at 3.85%.

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September 15, 2024
Asia-Pacific markets set to climb, with Australia poised to breach all-time closing high

The sails of the Opera House are illuminated with projections on the opening night of Vivid Sydney 2023 in Sydney, Australia, on Friday, May 26, 2023.

Anadolu Agency | Anadolu Agency | Getty Images

Asia-Pacific markets are set to open higher on Friday, extending gains from Thursday as Wall Street’s tech rally continued.

In Asia, investors will react to August inflation figures out from India late Thursday, with showed that the consumer price index rose 3.65% year on year, rising from a five-year low. This was above July’s revised figure of 3.6% and also beat expectations of 3.5% from economists polled by Reuters.

Australia’s S&P/ASX 200 is set to rise and breach its all-time closing high of 8,114.7, with futures standing at 8,115 compared to from its last close of 8,075.7.

Japan’s Nikkei 225 could go either way based off futures data, with the contract in Chicago at 36,945 and its counterpart in Osaka at 36,660 compared to the previous close of 36,833.27.

Hong Kong Hang Seng index futures were at 17,294, higher than the HSI’s last close of 17,240.

Futures for mainland China’s CSI 300 stood at 3,176, just slightly higher than the index’s last close, a near six-year low of 3,172.47 on Thursday.

Overnight in the U.S., the S&P 500 gained 0.75%, marking a four-day winning streak. The Dow Jones Industrial Average rose 0.58%, while the Nasdaq Composite saw the largest gain, rising 1%.

Thursday saw the last major data point for the U.S. economy before the Federal Reserve meeting next week, as the country’s producer price index rose 0.2% month on month, in line with expectations from Dow Jones. On a year-on-year basis, headline PPI rose 1.7%.

—CNBC’s Pia Singh, Jeff Cox and Sarah Min contributed to this report.

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September 12, 2024
Economist: China needs to employ more forceful property measures

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Wei Yao, chief APAC economist & head of research at Societe Generale, says the Chinese government needs to step up support in both housing and consumption to help lift up the economy.

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August 21, 2024
Pendal: Liquidating mainland property companies a step in the right direction

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Amy Xie Patrick, Head of Income Strategies at Pendal discusses the systemic issues facing the Chinese economy and the effects of liquidating Chinese property companies.

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August 15, 2024
Japan stocks lead gains in mixed Asia-Pacific markets with Nikkei up more than 2%

The momentum in Japan markets were largely driven by the country’s technology and financial sector.

Doctoregg | Moment | Getty Images

Japan’s major indexes gained more than 2% on Tuesday as markets resumed trading after a holiday.

The benchmark Nikkei 225 jumped 2.72% higher and breached 36,000 for the first time since Aug. 2. The broader Topix gained 2.25%.

The momentum was largely driven by the country’s technology and financial sectors, with Rakuten Group and Trend Micro leaping more than 8% and 6%, respectively.

The country’s parliament plans to hold a special session next week to discuss the Bank of Japan’s decision to raise interest rates last month, Reuters reported, citing government sources.

Japan’s producer price index rose 3% in July from a year earlier, climbing at a faster pace compared to 2.9% in June.

South Korea’s Kospi dipped 0.2%, while the small-cap Kosdaq lost 1.57%.

Wages in Australia rose 0.8% in the quarter ended June, the slowest pace since the same quarter a year earlier, compared with estimates of a 0.9% rise. Wages rose 4.1% on an annual basis.

Australia’s S&P/ASX 200 climbed 0.16%.

Hong Kong’s Hang Seng index kicked off the trading day with a 0.4% gain, while mainland China’s CSI 300 opened 0.06% higher.

In Southeast Asia, Singapore reported its economy grew 2.9% in the second quarter from a year ago, in line with the advance gross domestic product estimate released in July. The Ministry of Trade and Industry cited strength in the wholesale trade, finance and insurance as well as the information and communication sectors. The city-state also said it sees 2024 GDP growth of 2% to 3%, versus its previous forecast of 1% to 3%.

U.S. markets grappled with a choppy session overnight as investors braced for key inflation data.

The S&P 500 concluded the day flat at 5,344.39, while the tech-heavy Nasdaq Composite climbed 0.21% to close at 16,780.61, led by shares of Nvidia soaring 4%. On the flipside, the Dow Jones Industrial Average fell 140 points or 0.36% to conclude at 39,357.01.

Traders await Wednesday’s consumer price index for July, a key indicator of the health of the U.S. economy. Investors will analyze the data for indications the Federal Reserve can begin cutting rates in September.

—CNBC’s Brian Evans and Tanaya Macheel contributed to this report.

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August 12, 2024
CEO of Fortune REIT discusses its 2024 interim earnings

Justina Chiu, CEO of the real estate investment trust, says "we expect a better set of results in the second half of this year."

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August 6, 2024
Japan stocks plunge 5% with Asia markets broadly lower after Wall Street sell-off

An electronic stock board displayed inside the Kabuto One building in Tokyo, Japan, on Thursday, June 27, 2024.

Bloomberg | Bloomberg | Getty Images

Japan’s Nikkei 225 nosedived almost 5% on Friday, with most Asia-Pacific markets lower after a sell-off on Wall Street overnight.

The Nikkei extended its 2.62% slide on Thursday to lead losses in the region and reach its lowest level since February. The Topix also plunged more than 5%.

Some heavyweight names that are seeing losses include Softbank Group, which tumbled over 7%. Trading houses Mitsui and Marubeni saw losses of over 9% and 7%, respectively.

Japanese government bond yields fell, with the yield on the benchmark 10-year JGB falling below the 1% mark and hitting it lowest level since June 20.

South Korea’s Kospi tumbled 2.6%, while the small-cap Kosdaq plunged 2.56%.

However, K-pop stocks were a bright spot for the market. Shares of three of the four listed K-pop companies defied the broader sell-off to climb on Friday, led by Hybe after the firm announced its new business strategy on Thursday after market hours.

Australia’s S&P/ASX 200 was down 2.02% , retreating from its all-time high achieved on Thursday.

Hong Kong’s Hang Seng index futures were at 17,047, lower than the HSI’s last close of 17,304.96.

Separately, South Korea’s inflation numbers for July came in slightly higher than expected, with the country’s consumer price index climbing 2.6% year on year, compared to the 2.5% expected by economists polled by Reuters.

The gloomy sentiment in Asia markets comes after a sell-off on Wall Street in Thursday’s trading session, which saw all three major U.S. indexes plunge on recession fears.

The Dow Jones Industrial Average dropped 1.21%, while the S&P 500 shed 1.37% and the tech heavy Nasdaq Composite slipped 2.3%.

The Russell 2000 index, the small-cap benchmark that has rallied lately, dropped 3%.

In the U.S., fresh data stoked fears over a possible recession and apprehensions that the Federal Reserve could be too late in cutting interest rates.

Initial jobless claims rose the most since August 2023. The ISM manufacturing index, a barometer of factory activity in the U.S., came in at 46.8%, worse than expected and signaling economic contraction.

After these data, the 10-year Treasury yield dropped below 4% for the first time since February.

—CNBC’s Pia Singh and Samantha Subin contributed to this report.

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August 1, 2024
Bank of Japan raises benchmark interest rate, outlines roadmap for trimming bond buying program

Japan’s central bank has raised its benchmark interest rate to “around 0.25%” from its previous range of 0% to 0.1% and outlined its plan to taper its bond buying program.

This would mark the Bank of Japan’s highest interest rates since 2008.

But the Bank of Japan said it expects real interest rates to remain “significantly negative,” adding that “accommodative financial conditions will continue to firmly support economic activity.”

The central bank forecasts that the core inflation rate — which strips out prices of fresh food — will reach 2.5% by the end of the 2024 fiscal year, and “around 2%” for the 2025 and 2026 fiscal years.

The BOJ said it will continue to raise the policy interest rate and adjust the degree of monetary accommodation, assuming its economic outlook is realized.

Japan’s fiscal year runs from April 1 to March 31, which means the 2024 fiscal year will end on March 2025.

The Bank of Japan said that it will reduce the monthly outright purchases of Japanese government bonds to about 3 trillion yen ($19.64 billion) per month in the January to March 2026 quarter. As of its March release, the bank said that purchases of JGB’s amounted to about 6 trillion yen per month.

The amount is now planned to be cut by around 400 billion yen per quarter, the BOJ added, which will bring the total JGB holdings down by about 7% to 8% by the 2026 fiscal year. The BOJ’s JGB holdings currently stand at a whopping 579 trillion yen as of July 19, according to CNBC’s calculations.

However, the central bank emphasized that it will be flexible in this plan and will conduct an interim assessment of the reduction plan at the June 2025 meeting.

“The Bank will make nimble responses by, for example, increasing the amount of JGB purchases,” and added that it is “prepared to amend the plan at the MPMs, if deemed necessary.”

Following the decision, both the Nikkei 225 and the Topix gained 0.28% and 0.51% respectively, while the Japanese yen strengthened marginally to 152.72.

‘Virtuous cycle’ intensifying

In its statement, the BOJ pointed out that Japan’s economic activity and prices have been developing “generally in line with the outlook presented” in April.

The central bank noted that moves to raise wages have not only been seen in large firms, but have also spread to smaller firms.

The Japanese Trade Union Confederation, commonly known as Rengo, said on July 3 that big firms with 300 or more union-backed employees had raised wages by 5.19%, while small firms had increased pay by 4.45%. This marked the largest wage hike in 33 years, the union said.

The BOJ has repeatedly stated that it aims to form a “virtuous cycle” of increasing prices and wages.

The central bank said business fixed investment has been on a “moderate increasing trend” and corporate profits have been improving, while private consumption has been resilient despite the impact of price rises and other factors.

In light of these factors, the central bank slightly lowered its GDP growth forecast for the 2024 fiscal year to a range of 0.5%-0.7%, down from April’s forecast of 0.7%-1%. This was due to previously announced downward revisions of the 2023 GDP numbers.

Both GDP and inflation expectations for the 2025 and 2026 fiscal year remained largely similar.

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July 30, 2024
Rich Chinese travelers are flocking to Tokyo to take advantage of the weak yen

Chuo Ward, Tokyo, Japan – February 23, 2018; Top luxury shopping streets with multi colored neon signs. Ginza avenues are lined with shops of expensive brands and restaurants in the heart of Tokyo. It is half past five p.m. on Friday. People flock to Ginza for shopping, dinner and drinking with their friends. Ginza became synonymous with major shopping districts in Japan.

Marco Ferrarin | Moment | Getty Images

SHANGHAI — Luxury brands are seeing a surge in sales in Japan, largely driven by purchases from Chinese travelers taking advantage of a weak yen, according to earnings results this month.

LVMH, Kering and Burberry all noted the uptick, despite weaker sales in China that weighed on overall results.

Japan sales for Kering-owned Yves Saint Laurent surged by 42% in the first half of the year “due to strong growth in the number of tourists visiting from China and Southeast Asia, who were attracted by the pricing differential arising from the favorable exchange rate,” the parent company said Wednesday of its second-largest brand.

For the first half of the year, luxury group LVMH this week reported “exceptional growth in Japan arising in particular from purchases made by Chinese travelers.”

The Chinese yuan has gained 6.9% against the yen so far this year after this month hitting its strongest level against the Japanese currency in at least 24 years, according to Wind Information data going back to 2000.

The yen has fallen to 38-year lows against the U.S. dollar as the interest rate differential between the Federal Reserve and Bank of Japan remains wide.

Global visitors to Japan surged in the first half of the year, with South Korea accounting for the most travelers, according to the Japan National Tourism Organization.

But visitors from mainland China by far grew the most, surging by 415% in the first half of the year to 3.1 million visitors, the data showed.

Trip.com told CNBC it has seen an increase in spending from Chinese travelers heading to Japan in recent months compared to the previous three months. The travel service reported more than 60% growth both in bookings made through their customized travel team, and in their global shopping service, which partners with luxury brands worldwide. Trip did not specify which months, citing forthcoming earnings which have historically been released in September.

On Chinese social media sites like Weibo and Xiao Hong Shu, users have shared tips on where to luxury shop in Japan.

One netizen urged fellow netizens to save money — by shopping in Japan. She lauded a shopping mall in Sapporo for being the “top” standard for shopping with a “pretty” Gucci store.

Another post that CNBC viewed saw the creator saying that they “shopped till their legs turned jelly.”

Affluent Chinese households’ interest in visiting Japan rose by 5 percentage points in May versus a survey done last year in September, according to a study by consulting firm Oliver Wyman. The income segment covers families in mainland China earning at least 30,000 yuan a month ($4,140, or about $50,000 a year).

The Oliver Wyman research found that across a variety of luxury products, prices in Japan were 10% to 30% cheaper than in mainland China.

That was a steeper discount than when compared with Hong Kong. For example, a Louis Vuitton Speedy Bandouliere 20 sold for 16,700 yuan in mainland China at the time of the Oliver Wyman study, with a 3% discount in Hong Kong — and a 19% cheaper price in Japan.

Malaysia offered a 10% discount and France a 27% discount, the report said.

It cited an unnamed luxury brand retailer director as saying that “In Asia, Japan has the most comprehensive product range (e.g. style, color, etc.) besides Hong Kong, across most luxury brands.”

Slower growth in China

Chinese shoppers’ interest in Japan comes as overall Chinese luxury spending has declined amid uncertainty about future income. Locals have also increasingly preferred to take cheaper vacations within mainland China.

About half of Chinese luxury spending took place abroad prior to the pandemic, but that has now halved to about 20% to 25%, according to Oliver Wyman.

Japan was the fourth-most popular destination for overseas luxury shopping, although Hong Kong remained by far the most popular site, followed by Macao and Singapore, the report showed, as of May.

“Globally, the Chinese customer group also declined but held up better than Mainland China as spend was diverted offshore,” Burberry said in its earnings release earlier this month. “Japan continued to grow, benefitting from strong tourism spend mainly from Chinese and near shore customers in Asia, whilst locals remained soft.”

Burberry’s mainland China sales fell by 21% in the latest quarter from a year ago, while those in Japan rose by 6%. An overall decline in global sales prompted the luxury brand to issue a profit warning and suspend its dividend, as well as replace its CEO.

In the three months ending March 30, Coach owner Tapestry saw Greater China sales, which includes mainland China, Hong Kong, Macao, and Taiwan, drop by 2%. But Japan sales rose by 2% during that time. The company has yet to schedule its next earnings release.

— CNBC’s Sonia Heng contributed reporting from Singapore.

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July 25, 2024
Japan’s economy is weak because the BOJ failed to hike rates in time: CLSA

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Nicholas Smith, Japan strategist at CLSA, says the “economy has been weak because of consumption. Consumption has been weak because of the cost of living crisis. Who drove the cost of living crisis? The Bank of Japan did.”

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July 25, 2024
OUE REIT CEO discusses earnings and business outlook

Han Khim Siew, CEO of the Singapore OUE Real Estate Investment Trust, says "we don't want to over-hedge at this point in time."

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July 24, 2024