China Covid relaxation, Hong Kong stocks rise

Malaysian Prime Minister Anwar Ibrahim and Pakatan Harapan, the coalition he leads, “contradicted their campaign message of fighting corruption” by appointing Ahmad Zahid Hamidi as one of two deputy prime ministers, according to Adib Zalkapli, director at BowerGroupAsia.

Hamidi is facing 47 charges of corruption and money laundering.

“The optics definitely are not going to be very good for the government with the deputy prime minister going back and forth to the court to face the charges,” Adib told CNBC’s “Squawk Box Asia.”

But he said the reality is that the unity government needs UMNO and Barisan Nasional — which is led by Hamidi — on its side if it wants to “survive at least the next one year,” he added.

Anwar announced his cabinet late on Friday. Market reaction in Malaysia was slightly negative, with the benchmark KLCI index down 0.62% in Asia’s afternoon.

— Abigail Ng

Indonesia’s GoTo Group – the merged entity of ride-hailing giant Gojek and e-commerce marketplace Tokopedia – has lost 68.5% of its initial value of 400 trillion rupiah ($28 billion) since its initial public offering in April.

On Thursday, pre-IPO shareholders such as Alibaba and SoftBank opted out of a secondary offering following the lock-up expiration on Nov. 30, causing the stock price to drop 7%.

The companies had agreed to an eight-month lock-up period to support GoTo’s stock price following its IPO as early shareholders.

Its share price continued to drop in Monday’s session, with the company’s valuation standing at about 126 trillion rupiah, according to CNBC calculations. GoTo shares have been falling over the year, losing 68% of their value.

– Sheila Chiang

Australia’s central bank is expected to raise its cash rate by 25 basis points to 3.1% on Tuesday, according to economists polled by Reuters.

That would be the Reserve Bank of Australia’s eighth hike this year, and the third consecutive hike of 25 basis points since October.

In a statement following its November meeting, the RBA said “the full effect” of the series of cash rate hikes lie ahead.

Meanwhile, Matt Simpson, senior market analyst at City Index, said there’s potential for a pause in rate hikes further ahead.

“The case for a pause is certainly building,” he said. “Some measures of inflation expectations are moving lower, and the monthly inflation print suggests inflation has peaked.”

Inflation in Australia remains well above the RBA’s target of between 2% and 3%, though it saw slight easing in October, according to the central bank’s monthly consumer price indicator.

— Charmaine Jacob

Strategists at Morgan Stanley have raised its recommendation for Chinese stocks to overweight, according to a Sunday note.

The upgrade marks the end of the firm’s equal-weight stance on Chinese equities that it has held for close to two years, strategists led by Laura Wang said.

Morgan Stanley noted multiple factors seeing “meaningful positive development” since November, including what the firm views as “a confirmed path towards final post-Covid reopening.”

— Michael Bloom, Jihye Lee

Chinese technology, consumer and travel-related firms listed in Hong Kong saw sharp gains in early trade after some cities in China saw some easing in Covid restrictions.

Tech heavyweights Tencent gained 5.5% and Meituan rose 3.5%, while Alibaba jumped 4.72% and Xiaomi added 7.31%. EV stocks such as Li Auto jumped 9.19% and Nio climbed 11.5%.

Meanwhile, Hong Kong-listed casino stocks also jumped, with MGM China rising 12.44%, Wynn Macau climbing 12.35% and Sands China adding 7.5%. Galaxy Entertainment rose 3.61% and SJM Holdings rose 4.82%.

Hotpot restaurant operator Haidilao soared 15%, and shares of airlines also popped. China Southern Airlines and China Eastern Airlines each rose more than 5%, while Air China gained 4%.

The broader Hang Seng index was up 3.21%.

— Abigail Ng, Jihye Lee

The Caixin/S&P Global services Purchasing Managers’ Index for November came in at 46.7, representing the lowest reading in six months.

The print also marks the third consecutive month of contraction in output and new work, after October’s reading came in at 48.4, while September’s print was 49.3.

PMI readings are sequential and represent month-on-month changes in factory activity. The 50-point mark separates growth from contraction.

“The rate of decline was solid overall, but remained weaker than the falls seen during the previous major wave of Covid-19 cases from March to May,” Caixin said in a release.

“Efforts to curb the spread of Covid-19 amid a notable rise in case numbers in recent weeks, weighed on service sector business operations and customer demand across China during November,” it added.

China’s official non-manufacturing PMI released last week stood at 46.7, the lowest since April 2022.

— Abigail Ng

The Chinese currency strengthened to around 7 against the U.S. dollar following the latest reports that signaled further loosening of China’s Covid policies.

The offshore yuan traded at 6.9861 against the greenback, strengthening past 7-levels for the first time since mid-September.

Beijing and Shenzhen are taking steps to loosen testing requirements and quarantine rules despite the daily case count hovering near all-time highs.

The latest moves come about a week after public unrest erupted over the strict measures in various parts of the country.

— Jihye Lee

A veteran Schroders fund manager has named two global retailers that are about to ‘dominate’ their sector.

Andrew Brough, who runs the Schroder UK Mid Cap Fund, said the two conservatively run companies are taking market share ahead of a recession by silently acquiring failing competitors cheaply.

One of those stocks has already risen by 30% this year while its benchmark index has declined by 29%.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Stock futures dropped while bond yields rose in response to the 8:30 a.m. jobs data that came in stronger than expected by economists.

Here’s how each major futures index and the notable bond yields moved over the course of the 30 minutes leading up to and following the release of the data:

Goldman Sachs sees one opportunity in electric vehicles that’s on an “upward trend.”

This trend will gain pace as EVs become “ever more technology driven” and simpler to build, said Goldman analysts in a Dec. 1 report.

That’s set to benefit one global stock, said Goldman, which gives the stock up to 90% upside in its bull case for the firm.

CNBC’s Pro subscribers can read more here.

— Weizhen Tan

Job growth was stronger than expected in November despite the Federal Reserve’s efforts to cool the labor market.

Nonfarm payrolls grew by 263,000 last month while the unemployment rate was unchanged at 3.7%, according to the Labor Department on Friday.

Payroll numbers were expected to jump by 200,000 more jobs, according to consensus estimates from the Dow Jones. The unemployment rate was expected to remain at 3.7%.

Stock futures dropped following the payrolls release.

— Sarah Min