Asia-Pacific shares trade higher, BOJ leaves no change in yield range

Morgan Stanley projects China’s equity market to be top performer in 2023

We're getting even more bullish on Chinese stocks, says Morgan Stanley

Morgan Stanley estimates that the Chinese equity market will emerge as the best performer in 2023.

The MSCI China index will reach 80 and the Hang Seng index will rise to 24,500 by the end of the year, said Laura Wang, chief China equity strategist at Morgan Stanley. That would be roughly 15% upside to where the market is trading right now.

“This really means that the Chinese equity market will actually top the performance of the global equity market for 2023, so it’s time to get back to China,” he said.

Wang’s recommendation is to buy stocks of large-cap and highly liquid Internet names.

The Internet sector has “a very high correlation with the general momentum in consumption in China,” especially in the country’s post-Covid recovery journey, she said.

Wang said many global institutional investors are still significantly underweight on these large-cap liquid names.

-Lee Ying Shan

Oil prices climb on optimism over China’s reopening and improving demand

Oil prices found support on optimism over China’s reopening and fuel demand, as OPEC forecast Chinese oil demand is on track for a bounce.

Brent crude futures rose 0.85% to $86.65 a barrel, while US West Texas Intermediate futures rose 0.91% to $80.91 a barrel.

“Chinese oil demand is on the rise again due to the recent relaxation of the country’s zero-Covid measures,” OPEC’s monthly oil report said.

It said China’s oil demand would rebound from an annual decline of 0.3 million barrels per day year-on-year in the first quarter of 2022 to an annual increase of 0.2 million barrels per day in the fourth quarter of 2022.

-Lee Ying Shan

Japanese yen weakens after BOJ announces no change in yield curve range

The Japanese yen weakened against the greenback after the Bank of Japan surprised the markets by keeping its yield curve tolerance band unchanged.

The Japanese yen weakened 2.04% against the US dollar following the announcement and was last held at 130.94.

“Japan’s economy is projected to grow at a pace above its potential growth rate,” the central bank said in a statement.

The Bank of Japan also left its interest rate unchanged at an ultra-dowish -0.1% – in line with expectations and has maintained the same rate since 2016.

-Jiehye Lee, Lee Ying Shan

Gaming stocks soar after China approves license

Hong Kong-listed gaming stocks including NetEase, Tencent Holdings and Mihyo rose after China approved licenses for 88 games, further easing Beijing’s gaming crackdown.

shares of netage It jumped as much as 6.81% in early trade, hitting its highest level in more than four months. Tencent Shares added 0.11%.

-Lee Ying Shan

Bank of Japan may increase yield curve control by another 50 basis points: UBS

Japan’s central bank is likely to widen its 10-year Treasury yield curve control range by 50 basis points below its 0% target and above its 1% range, said Tan Teck Leng, executive director at UBS Global Wealth Management .

A complete abandonment of the YCC is unlikely, he said on CNBC’s “Squawk Box Asia,” adding a move that would be “immoral” of the central bank.

“I think the easiest thing for them to do is remove the cap, let it get a fair price – but then it comes with huge uncertainties, which is why we think that, as a middle ground, They have to at least lift this 1.0% cap,” he said.

Yield on 10-year Japanese government bond It crossed the upper boundary of its band for the fifth straight session on Wednesday morning ahead of the BOJ’s monetary policy announcement.

Japan’s core manufacturing orders for November fell more than expected

Japan’s private sector manufacturing orders for November fell 8.3% from the previous month, according to official data.

The decline was much larger than Reuters’ expectation of a 0.9% decline. On an annual basis, manufacturing orders fell 3.7%.

The private sector machinery figures do not include floating orders from ships and power companies.

-Lee Ying Shan

CNBC Pro: Thinking of jumping back into Big Tech? This Investor Is Particularly Wary of 2 Stocks

CNBC Pro: Morgan Stanley says cheap EVs are coming — and names global stocks set to profit

As electric cars become increasingly popular, a new manufacturing technology that could make them more affordable is generating interest, according to Morgan Stanley.

The Wall Street bank said some automakers are outsourcing the process, which could benefit three major Asian parts suppliers.

CNBC Pro subscribers can read more here.

Ganesh Rao

Stocks end the day mixed, Dow falls nearly 400 points

The Dow Jones Industrial Average index fell by the end of the day, as shares of Goldman Sachs weighed in on the stock index.

The Dow closed at 33,910.85, down 391.76 points, or 1.14%. The S&P 500 closed down 0.2% at 3,990.97. The Nasdaq Composite ended the day at 11,095.11, up 0.14%.

– Tanya Machil

Bank of America sees recession beginning later

The recession probably won’t start until after 2023 because consumer spending has been stronger than expected and the Federal Reserve has stepped up its interest rate hikes, according to Bank of America.

“We push back the timing of our outlook for a mild recession in the US economy by about a quarter, given the stability in consumer spending due to strong labor markets, excess savings, declining energy prices and easier financial conditions,” the firm said. ” a customer note. “That said, we think headwinds will motivate consumers to reduce spending and increase the savings rate as the year progresses.”

That puts the recession in its second quarter, driven by a slowdown in investment-led spending leaking into consumer spending.

After raising its benchmark lending rate to 4.25 percentage points in 2022, the Fed is expected to ease back to 0.25 percentage points in February. This is followed by additional quarter-point increases in March and May.

A rate cut likely won’t come until 2024, the firm said.

—Jeff Cox

Goldman Sachs shares fall on earnings miss

Shares of Goldman Sachs declined 2.4% after the Wall Street investment bank shared fourth-quarter earnings results that missed analysts’ expectations on both the top and bottom lines.

The bank reported earnings of $3.32 per share on $10.59 billion in revenue. According to analysts polled by Refinitiv, consensus estimates call for earnings of $5.48 per share on revenue of $10.83 billion.

Provision for credit losses was also slightly higher than expected.

– Hugh Sonn, Samantha Subin

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