Asia-Pacific shares, China, yuan, Bank of Japan, Hang Seng index

Nio shares plunged after it cut its fourth-quarter delivery outlook

Shares of Hong Kong-listed Chinese EV maker Nio fell 9.11% in Asian trading hours after the company lowered its fourth-quarter delivery outlook, citing supply chain disruptions due to the Covid outbreak in China’s major cities.

The company now expects to deliver between 38,500 and 39,500 vehicles, down from its initial projection of 43,000 to 48,000 vehicles, according to updated delivery guidance.

Its New York-listed shares fell 8% during US trading hours.

— Rebecca Picciotto, Lee Ying Shan

The Bank of Japan said the yield curve tolerance adjustment does not mean a change in monetary policy

The Bank of Japan reiterated that its latest decision to expand the yield curve control tolerance range does not mean a change in the direction of its monetary policy, according to Summary Opinions from its December meeting.

“The expansion of the 10-year JFB yield fluctuation range from the target level is not intended to change the direction of monetary easing,” he said.

“It is a policy step to make the current monetary easing… more sustainable,” he added.

Japan’s central bank added that revising its inflation target of 2% was “inappropriate.”

“The revision of the value is not justified because it can make the target ambiguous and the response of monetary policy insufficient,” he said.

– Jihye Lee

Tesla’s Asian suppliers fell after production halts were reported at the Shanghai factory

Shares of Tesla suppliers in Asia fell as production at the company’s Shanghai factory reportedly remained on hold after seeing a wave of Covid infections among its Chinese workforce.

South Korea’s LG Chem fell 3.66% and Japan Panasonic lost 0.31% in early Asian trade. Shares of Contemporary Amperex Technology, also known as CATL, fell 3.39%.

– Jihye Lee

Oil prices were supported by China’s reopening and Moscow’s decree to ban oil sales

Oil prices rose on a potential boost to demand driven by China’s reopening, as well as Moscow’s announcement to ban oil sales to countries participating in a US-led price cap on Russian crude.

Brent crude futures rose 0.2% to $84.50 a barrel, while US West Texas Intermediate futures rose 0.19% to $79.7 a barrel.

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According to a decree of Russian President Vladimir Putin, published on the Kremlin portal, Moscow said the imposed ban “applies to all stages of sales up to and including the final buyer.”

– Lee Ying Shan

The US is considering new rules for travelers from China

The US government is considering imposing new Covid rules on travelers from China, officials say.

“There is growing concern in the international community about the ongoing surge of COVID-19 in China and the lack of transparent data, including viral genomic sequence data, reported from the PRC,” the official said.

Separately, Japan announced on Tuesday that it will require a negative Covid test for visitors from China from Dec 30.

Read the full story here.

– Jihye Lee

Hong Kong’s reopening stocks rose following China’s reopening measures

China’s factory activity is expected to contract for the third month in a row

China’s official manufacturing Purchasing Managers’ Index for December is expected to reach 48 on Saturday, below the 50-point mark that separates growth from contraction.

Analysts polled by Reuters predicted the reading would remain unchanged from the November reading released by the Bureau of National Statistics.

PMI readings are sequential and represent month-to-month changes in factory activity.

— Lee Ying Shan

Tesla extends production suspension at Shanghai factory: Wall Street Journal

Tesla suspended production at a factory in Shanghai on Saturday after an outbreak of Covid among its workers at the facility, the Wall Street Journal reported.

The decision comes as an extension of a planned eight-day production hiatus, according to the report. The electric vehicle maker has informed workers that production will resume on January 2, he said.

Tesla shares plunged 11% at the close and continued to decline further in after-hours trading.

—Lee Ying Shan, Alex Harring

Platinum on pace for best quarter since 2009

Platinum is on track for its best quarter since 2009 — and stocks linked to the metal are also performing strongly.

The metal is trading up nearly 19.86% compared to the start of the quarter. That’s the best performance platinum has seen since the first quarter of 2009, when it gained 19.89%.

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If platinum surpasses that quarter, it will be its best quarter since its first in 2008. During that period, it gained 33.96%.

Stocks associated with platinum rose in turn. In this quarter, Impala Platinum plus 31.7%. Anglo American Platinum and Sibanye Stillwater followed, gaining 21% and 17.6%, respectively, in the same period.

The Platinum Investment Council attributed some of the price increases to physical stocks of the metal being imported into China, which has reduced supplies elsewhere.

— Alex Harring, Gina Francolla

Oil hit a three-week high as investors welcomed China’s quarantine changes

Oil prices hit a three-week high as investors hedged hopes of a recovery in demand following the latest news on China’s easing of Covid restrictions.

Brent crude oil rose $1.55, or 1.9%, to $85.47 a barrel. US West Texas Intermediate crude oil added $1.37, or 1.7%, to $80.93.

Both hit highs not seen since December 5 earlier in the trading day. China’s National Health Commission said on Monday it would stop mandating tourists coming to the country to quarantine, a move seen by investors as a key step in lifting Covid restrictions that have hampered supply chains and global travel.

China-related stocks rose as the country eased restrictions

Shares of China-based companies that trade on US exchanges rose in premarket as the country eased Covid restrictions. China announced it plans to lift quarantine requirements for travelers starting January 8.

Alibaba shares gained 1.5%, while and Pinduoduo rose more than 2% each.

China ETFs also gained, with the KraneShares CSI China Internet ETF up 2.7% in premarket trading, on pace for its first gain in three sessions. iShares China Large-Cap and iShares China Large-Cap added 2% each.

The news also lifted Macau-related casino shares in the premarket. Las Vegas Sands rose 1.4%, while Wynn and Melco Resorts rose 2.5% and 4.2%, respectively.

— Samantha Subin

International and emerging market stocks see the most returns over the next 7 years, GMO said

International stocks, but especially emerging market stocks – and especially emerging market value stocks – offer the best chance of outperforming US large and small stocks over the next seven years, even after adjusting for inflation, according to the latest monthly projections from Grantham Mayo Van Otterloo & Co.

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Emerging market value stocks are expected to return 9% per year in real terms over the next seven years, while emerging market stocks as a whole are forecast to return 5.2% per year. International small-cap stocks are projected to return 4.5% real while international large-cap stocks come in at 2.4% per year, after inflation.

The US is not forecast to compete, with US small caps projected to shrink by 1.4% annually after inflation, and US large caps estimated to decline by an average of 1.8% annually over seven years.

Likewise, emerging market debt is likely to end up as the best performing fixed income class, returning 3.5% real annually, followed by US cash at +0.8%, US inflation-linked bonds at 0.3%. International bonds hedged against currency exposure are forecast to lose 1.8% a year and US bonds return -0.3%.

As stocks tumbled in 2022, valuations improved and prospects for future returns brightened. In early 2022, GMO pegged emerging market value stocks for +5% annual return over seven years, emerging market stocks +2.2%, international small caps -1.2%, international large caps -2.5%, US small caps – 6.5% and Total US -7.3%.

US cash is projected to lose the least amount of money at the start of the year, falling 1.1% a year after inflation looks out over the next seven years, followed by emerging market debt at -1.7%, US inflation-linked bonds (- 3.7%), bonds US (-4.1%) and international currency-hedged bonds (-4.7%).

– Scott Schnipper

Treasury revenue climbs

Bond yields rose on Tuesday, putting pressure on growth stocks such as technology.

Results on 10-year treasury the last note was up 11 basis points at 3.854%. The Treasury 2 years yields rose 8 basis points to last trade at 4.402%.

Yield and price have an inverse relationship. One basis point equals 0.01%.

The tech-heavy Nasdaq Composite, which is more exposed to moves in rates, last traded 1.2% lower.

— Samantha Subin


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