More growth policies seen as needed for China’s economy despite rate cuts
China still needs more growth policies to stabilize its economy after the central bank moved unexpectedly to cut its key interest rates, the Chinese central-bank backed Financial News said on Tuesday.
The People’s Bank of China lowered the rate on its 1-year policy loans by 10 basis points to 2.75% and the 7-day reverse repo rate to 2% from 2.1% on Monday. It defied economists expectations that the central bank would act on rate cuts.
Citing Wen Bin, chief economist of China Minsheng Bank, Financial News said for the economy to recover further, the rate of increase in infrastructure investments needed to accelerate, especially since recovery momentum has slowed.
Wen also said the weakness in domestic demand was a problem for the economy and Beijing would need to put out policies that would shore up economic growth.
Wang Qing, chief macro analyst at Dongfang Jincheng, was also cited saying that Beijing would likely boost fiscal policies and industrial policies to propel recovery.
Luo Huanjie, senior macro researcher at the Zhixin Investment Research Institute, said in light of possible future pandemic outbreaks, Beijing should prioritize the adjustment of macro policies in an effort to further improve the economy.
– Su-Lin Tan
China’s interest rate cuts are a modest first step, says professor
The People’s Bank of China’s surprise interest rate cuts on borrowing costs for medium-term policy loans are a modest first step, according to Eswar Prasad, senior professor of international trade policy at Cornell University.
“The rate cut that we’ve seen right now is very modest. Ten basis-points doesn’t amount to very much, although it does unleash some liquidity,” he told CNBC’s “Squawk Box Asia” on Tuesday.
The PBOC lowered its one-year medium-term lending facility on 400 billion yuan ($59.3 billion) of loans to some financial institutions by 10 basis points to 2.75%, according to an announcement posted on the central bank’s website. It also cut its seven-day reverse repo rate by 10 basis points to 2%.
“It seems like a very small step. But the PBOC is trying to send a very calibrated signal here that it is ready to step in if circumstances were warranted,” the professor added.
“I think it is very cautious about unleashing any significant monetary stimulus because they know that it’s going to create medium-term financial risks.”
— Sumathi Bala
Australia to look into competition, consumer issues for social media services
The ACCC said its report will also consider YouTube, Reddit and Discord.
“We hope to examine trends in user preferences and engagement over time, and consider how users choose social media services,” it said in a statement. The body plans to look into “if new entrants such as TikTok have changed the competitive landscape.”
On Friday, China released a list of algorithms driving its tech giants’ success, including that of Alibaba and Tencent. The filing also mentions how Douyin, the Chinese version of TikTok, uses such data to recommend content to users.
— Jihye Lee
Gas prices continue to surge up north as Japanese industrials lag
Energy prices will continue to move north amid strong consumption, Skylar Capital Management head trader and chief executive Bill Perkins told “Street Signs Asia.”
Surging gas prices has seen the northern hemisphere countries, including Asian ones like Japan scrambling for imports of liquified natural gas. The Asian benchmark spot price is on an upward trajectory while Japanese industrial stocks are in the red on Tuesday.
“I think that these pull backs with traders taking profit and concerns in China over recession and the real estate conditions over there. They are concerns but they are overblown relative to the macro trends going on in this cycle,” he said.
Perkins said there will be little relent in surging oil prices, and he expects the WPI oil price to move north of $100 a barrel and Brent to push past $120 a barrel.
– Su-Lin Tan
Anglo-Australian miner BHP soars after posting its second-biggest profit in history
Anglo-Australian miner BHP shares soared 3.80% after posting its second-biggest profit in history and a record dividend worth $16.3 billion.
Its full-year results ending 30 June have beaten expectations.
BHP Chief Executive Mike Henry said BHP enters the 2023 financial year “in great shape strategically, operationally and financially.”
He also expects China to “emerge as a source of stability for commodity demand in the year ahead, with policy support gradually taking hold.”
“At the same time, we expect to see a slowdown in advanced economies as monetary policy tightens, as well as ongoing geopolitical uncertainty and inflationary pressures,” he said in a press release.
“The direct and indirect impacts of Europe’s energy crisis are a particular point of concern. Tight labor markets will remain a challenge for global and local supply chains.”
– Su-Lin Tan
US, Japan and South Korea complete missile search and tracking exercise
The Pentagon said the United States Navy, Japan Maritime Self-Defense Force, and Republic of Korea (ROK) Navy have completed a missile warning and ballistic missile search and tracking exercise off the coast of the Pacific Missile Range Facility (PMRF) in Hawaii.
The US, Japanese, and ROK participants shared tactical data link information in accordance with a trilateral information sharing agreement.
“Following the June 11 US-ROK-Japan Trilateral Ministerial Meeting in Singapore, this missile warning and ballistic missile search and tracking exercise demonstrated the commitment of the US, ROK, and Japan to furthering trilateral cooperation to respond to DPRK challenges, protecting shared security and prosperity, and bolstering the rules-based international order,” the Pentagon said in a note.
– Su-Lin Tan
Chinese fast food operator Yum goes for HK primary listing
Chinese fast food operator Yum China Holdings announced Monday it has applied for the conversion of its secondary listing to a primary listing status in Hong Kong. It currently has a dual listing on the New York Stock Exchange.
“Since our secondary listing in Hong Kong in 2020, we have enhanced access to our shareholders in Asia. We have diversified our investor base and tapped into additional capital pools,” said Joey Wat, CEO of Yum China, in a press release.
“Dual primary listing would bring us even closer to our employees, customers and other stakeholders. This strategic move would further broaden our shareholder universe, increase liquidity and mitigate the risk of delisting from the NYSE,” he added.
– Su-Lin Tan
CNBC Pro: Strategist names the global stocks to buy despite slowing growth
There are pockets of “compelling value” in three sectors — even amid an economic slowdown, said Patrick Armstrong, chief investment officer at Plurimi Group.
These sectors are “incredibly cheap,” he told CNBC’s “Squawk Box Europe,” naming his favorite stocks and explaining why he likes them.
CNBC Pro: Tesla’s valuation doesn’t make sense until it hits this level, fund manager says
You’re here may be one of the best-known electric vehicle makers, but fund manager and tech investor Paul Meeks thinks the stock is still too expensive.
Meeks revealed to CNBC Pro Talks the valuation at which he will find Tesla “more interesting.”
Pro subscribers can read the story here.
— Zavier Ong