Hong Kong stocks lead losses in Asia on China unrest, oil at lowest in 2022

Indian stocks reached new highs in Monday’s session.

The Nifty 50 index, the flagship index on the National Stock Exchange of India, touched 18,611.05, breaching the previous intraday all-time high level of 18,604.45 seen on Oct. 19, 2021.

The Sensex hit 62,690.39 in India’s morning session, also exceeding the previous all-time high levels of 62,447.73 seen on Nov. 25 this year.

The European Union’s proposed cap on the price of Russian oil will likely not be lowered due to Poland and the Baltic States’ dissent, according to Commonwealth Bank of Australia.

The two countries have objected the proposal claims, saying that the current proposal is too generous and too close to the current price that Russia gets on the market.

Vivek Dhar, CBA’s Director of Mining and Energy Commodities research, questioned the feasibility of reflecting the opposition of the more hawkish member states of the EU.

“Now we know that Poland and the Baltic states are disagreeing heavily with how high that price cap is. But realistically speaking, are we going to see that price lower because of their dissent?” he said on CNBC’s “Street Signs Asia.”

Talks on the price cap have been postponed to later in the day after Friday’s discussions fail to yield a conclusion.

— Lee Ying Shan

It is “not at all” easy to shift production of Apple’s latest Pro iPhones away from the Zhengzhou factory where a workers’ revolt against China’s zero-Covid policy hurt supply chains, Martin Yang, senior analyst of emerging technologies of investment firm Oppenheimer told CNBC’s “Street Signs Asia.”

“The iPhone 14 Pro and Pro Max stay exclusively produced in Zhengzhou,” he said, while noting that some of the production of the lower end phones such as the iPhone 13 and iPhone 14 was shifted to factories in China’s Shenzhen and India. 

“That suggests to me that the higher-end iPhones have a different set of production processes, which is not very easy to be transferred elsewhere. And oftentimes that refers to very custom equipment and a trained workforce that are not readily available elsewhere,” said Yang.

However, he said he has “high confidence” that customers will not switch over to competitor Samsung because of Apple’s “competitive advantage.” 

The iPhones’ perceived value over Android phones have grown because Apple is able to secure higher-end parts with lower costs while anyone else is squeezed by margins, he said.

— Sheila Chiang

Hong Kong-headquartered Casetify is now “close to a billion” in valuation, its co-founder and CEO Wesley Ng told CNBC Make It. 

This is after its first round of fundraising in 2021 after 10 years of operations — where the tech accessory company reportedly raked in “eight figures” from C Capital. 

With global inflation and impending economic headwinds, Ng said Casetify has been “fortunate” not to be heavily venture-backed, or it would have set the company up for “unrealistic goals.”

“We did not overly invest in things in exchange for unnecessary growth. So very fortunately, we are healthy but we remain very cautious.” 

Read more about Ng’s multimillion-dollar company and his business tips here. 

— Goh Chiew Tong

China is most likely to reopen around April next year after the National People’s Congress takes place, but there’s a chance that authorities reopen earlier due to difficulties in keeping Covid cases under control, according to Goldman Sachs.

Chief China Economist Hui Shan said there’s a 60% chance of the former scenario taking place.

“There is also a 30% probability of earlier reopening precisely because of the difficulty in keeping Covid under control, and the lack of medical preparation suggests it could be quite a messy process,” she said.

“Medical preparation is not ready yet, whereas the virus has evolved in such a way [that] it’s getting very costly to continue to implement that dynamic zero-Covid policy,” she said.

She said that policymakers need to weigh out the costs and benefits of the stringent Covid restrictions as protests take place across the country.

“This is not something they had experienced before [or] had a lot of experience in dealing with in prior cycles,” she said.

— Su-Lin Tan

Both U.S. crude futures and Brent crude futures shed more than 2% each in Asia’s morning trade as fears on demand from China faltering came into focus.

West Texas Intermediate futures fell as low as $73.86 per barrel, the lowest levels since Dec. 2021, while Brent crude futures slipped to $81.16 per barrel at the session’s lows so far.

WTI was last down 2.58% at $74.31 per barrel, while Brent crude last traded 2.37% lower at $81.65 per barrel.

— Abigail Ng

China’s household confidence will revive once China reopens, thanks to excess in savings and pent-up demand, BofA Securities chief greater China economist Helen Qiao said.

“We have seen household savings accumulatively year-to-date at end of October going all the way up to about 5 trillion renminbi, compared to a regular year, about only 2 trillion,” she told CNBC’s “Squawk Box Asia.”

“People are reducing their loans but actually increasing their household deposits, because they have nowhere to spend,” she said.

— Su-Lin Tan

China’s latest move to cut the reserve requirement ratio for banks by 25 basis points won’t have much significance on its economy without a drastic shift from its stringent Covid restrictions, according to Economist Corporate Network.

“Consumer and investor sentiment has been so damaged by these policies that you’re not going to see any recovery in any meaningful sense until there’s a shift,” Mattie Bekink, the China director at the organization, said on CNBC’s “Squawk Box Asia.”

Bekink emphasized how sensitive investor sentiment has affected markets previously.

“We’ve already seen markets move quite significantly based on basically rumors that Beijing was going to relax — that was just a few weeks ago,” she said.

“The lockdowns seem to be endless and relentless,” Bekink said.

— Jihye Lee

Global currencies will also be at risk of weakening along with the offshore Chinese yuan amid unrest in China on its zero-Covid policies because of how supply chains may be affected, according to Standard Chartered.

“The key question for how the world reacts is how the Chinese supply chain responds,” Steven Englander, Standard Chartered Bank’s managing director said on CNBC’s “Squawk Box Asia.”

“If it gets further disrupted, I think it’s a risk-off thing,” he said. “Not just CNH, but other currencies will be at risk.”

Englander added that traders may be looking to reduce their exposure to further risk.

— Jihye Lee

Shares in mass market retailers will fall as profit margins are squeezed, and consumers curtail spending next year, according to Plurimi Wealth’s chief investment officer.

Patrick Armstrong told CNBC’s Pro Talks that he was betting against a Japanese retailer, multinational clothing company, and a Canadian e-commerce platform by selling their shares short.

Armstrong believes consumers will hold back spending next year amid rising interest rates and household bills.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Crude oil futures slipped early in Asia as high Covid cases, virus restrictions and unrest in China raise fears about demand from the world’s second-largest oil consumer.

West Texas Intermediate futures shed 0.35% to $76.01 per barrel, while Brent crude futures lost 0.26% to $83.41 per barrel.

Oil prices saw sharp falls last week as “mounting lockdowns in China raised concerns over demand,” ANZ Research’s Brian Martin and Daniel Hynes wrote in a Monday note.

“This remains a headwind for oil demand,” they said, adding that the impact of rising Covid cases was reflected in China’s mobility data as well.

— Abigail Ng

One Big Tech stock is at an “attractive” price point to buy right now, according to Foord Asset Management’s Brian Arcese.

Arcese, a portfolio manager at the firm, expects growth in the “mid-teens” despite cyclical headwinds in its industry.

CNBC Pro subscribers can read more here.

— Weizhen Tan

The offshore Chinese yuan sharply weakened against the U.S. dollar amid negative sentiment over unrest in China over Covid restrictions.

The currency weakened around 0.8% against the U.S. dollar to 7.2529 in Asia’s morning trade.

The dollar index rose 0.32% to 106.29, with investors likely seeing the greenback as a safe haven asset as concern over China grows.

— Jihye Lee