China still needs more growth policies to stabilize its economy after the central bank unexpectedly moved to cut its key interest rates, China’s central bank backed by Financial News said on Tuesday.
The People’s Bank of China cut its 1-year policy lending rate by 10 basis points to 2.75 percent and the 7-day reverse repo rate to 2 percent from 2.1 percent on Monday. It defied economists’ expectations that the central bank would act on rate cuts.
Quoting Wen Bin, chief economist of China Minsheng Bank, Financial News said that for the economy to recover further, the pace of increased infrastructure investment needed to accelerate, especially as the momentum of the recovery has slowed down
Wen also said that weak domestic demand was a problem for the economy and that Beijing should put in place policies that promote economic growth.
Wang Qing, chief macro analyst at Dongfang Jincheng, was also quoted as saying Beijing would likely boost fiscal and industrial policies to boost the recovery.
Luo Huanjie, senior macro researcher at Zhixin Investment Research Institute, said that in view of possible future outbreaks of the pandemic, Beijing should prioritize macro policy adjustment in an effort to further improve the economy
The surprise of the People’s Bank of China According to Eswar Prasad, a senior professor of international trade policy at Cornell University, interest rate cuts to the borrowing costs of medium-term policy loans are a modest first step.
“The rate cut that we’ve seen now is very modest. Ten basis points is not a lot, although it does free up some liquidity,” he told CNBC’s “Squawk Box Asia” on Tuesday.
According to an announcement on the central bank’s website, the PBOC lowered its one-year medium-term lending facility of 400 billion yuan ($59.3 billion) of loans to some financial institutions by 10 basis points to 2 .75% 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 intervene if the circumstances warrant it,” the professor added.
“I think they’re very cautious about unleashing any major monetary stimulus because they know it’s going to create medium-term financial risks.”
— Sumathi Bala
The Australian Competition and Consumer Commission said it will look into competition and consumer issues with social media services such as Facebook, Instagram, Twitter, TikTok and Snapchat.
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,” he said in a statement. The body plans to investigate “whether new entrants like TikTok have changed the competitive landscape.”
On Friday, China published a list of algorithms that drive the success of its tech giants, including Alibaba and Tencent. The presentation also mentions how Douyin, the Chinese version of TikTok, uses this data to recommend content to users.
— Jihye Lee
Energy prices will continue to move northward amid strong consumption, Skylar Capital Management chief trader and CEO Bill Perkins told “Street Signs Asia.”
Rising gas prices have seen northern hemisphere countries, including Asian ones like Japan, scrambling for LNG imports. The Asian benchmark spot price is on a bullish trajectory, while Japanese industrial shares are in the red on Tuesday.
“I think these pullbacks with traders taking profits and concerns in China about the recession and real estate conditions there. Those are concerns, but they’re overblown relative to the macro trends that are taking place in this cycle,” he said.
Perkins said there will be little abatement in rising oil prices, and he expects the WPI oil price to move north of $100 a barrel and Brent to break above $120 a barrel.
Shares in Anglo-Australian miner BHP rose 3.80% after posting the second-biggest profit ever and a record dividend of $16.3 billion.
Its annual results ended June 30 exceeded 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 next year, with policy support gradually consolidating.”
“At the same time, we expect to see a slowdown in advanced economies as monetary policy tightens, as well as geopolitical uncertainty and ongoing inflationary pressures,” he said in a press release.
“The direct and indirect impacts of Europe’s energy crisis are of particular concern. Tight labor markets will continue to be a challenge for global and local supply chains.”
The situation is reversed for peers Rio Tinto and Fortescue Metals which have registered falls.
The Pentagon said the US Navy, the Japan Maritime Self-Defense Force and the Republic of Korea (ROK) Navy have completed a missile warning and ballistic missile search and tracking exercise off the Pacific Coast Missile Facility (PMRF) in Hawaii.
Participants from the United States, Japan, and the Republic of Korea shared tactical data link information under a trilateral information sharing agreement.
“Following the trilateral ministerial meeting of the United States, the Republic of Korea and Japan on June 11 in Singapore, this missile warning and ballistic missile search and tracking exercise demonstrated the commitment of the US, the Republic of Korea and Japan to foster trilateral cooperation in responding to DPRK challenges, protecting shared security and prosperity, and strengthening the rules-based international order,” the Pentagon said in a statement.
Chinese fast food operator Yum China Holdings announced on Monday that it has applied to convert its secondary listing to a primary listing in Hong Kong. It is currently dual-listed on the New York Stock Exchange.
“Since our secondary listing in Hong Kong in 2020, we have improved access to our shareholders in Asia. We have diversified our investor base and leveraged additional capital funds,” said Joey Wat, CEO of Yum China , in a press release.
“The dual main listing would bring us even closer to our employees, customers and other stakeholders. This strategic move would further expand our shareholder universe, increase liquidity and mitigate the risk of delisting from Nova York,” he added.
Yum has the exclusive rights to operate fast food brands such as KFC, Pizza Hut and Taco Bell in China.
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.
Professional subscribers can read the story here.
– Weizhen Tan
Tesla may be one of the best-known electric vehicle manufacturers, but fund manager and tech investor Paul Meeks believes the stock is still too expensive.
Meeks revealed to CNBC Pro Talks the valuation at which he will find Tesla “more interesting.”
Professional subscribers can read the story here.
— Zavier Ong
Last weekend, I wrote about Warren Mosler's argument that the Fed's rate hikes could be…
Last weekend, I he wrote on Warren Mosler's argument that the Fed's rate hikes could…
Last week, the chairman of the Fed, Jerome Powell said, "the disinflationary process has begun".…
Earlier this week, I joined Romaine Bostick and Scarlet Fu Bloomberg TV. The Congressional Budget…
Tomorrow morning, I'll be joining CNBC's Squawk Box to talk about a new effort tax…
Former Vice President Mike Pence talks about privatizing Social Security. The remarks came Thursday before…