Hong Kong’s Hang Seng Index fell over 2% in trading today, dragged down by the consumer cyclicals sector. E-commerce giant JD.com was the leading contributor to the Index’s losses, with its shares slumping as much as 12% to reach their lowest point in a year. Other consumer stocks, including Chow Tai Fook Jewelry and Haidilao, also saw significant declines. Automobile company Zhongsheng Group was down nearly 5%. Additionally, other index heavyweights such as Baidu, Alibaba, and Meituan also posted losses. Overall, the Hang Seng Index faced broad-based weakness in the consumer cyclicals sector.
In other news, China reported flat consumer prices in September, falling below expectations. The consumer price index showed no change on an annual basis, below the forecasted 0.2% increase. China’s producer price index fell 2.5% from a year earlier, weaker than the predicted 2.4% decline. These tepid price dynamics highlight the challenges of the country’s economic recovery following the end of strict Covid restrictions last year.
Shares of JD.com also slumped to their lowest point in a year due to concerns over weaker retail growth. The Chinese e-commerce giant’s shares fell 12.1% in early trading in Hong Kong. This year alone, JD.com’s market capitalization has halved since the beginning of the year. The decline in the company’s stock was triggered by downgrades from Morgan Stanley and target price revisions from Jeffries.
China’s exports and imports both experienced declines in September, albeit smaller than expected. Exports fell 6.2% on an annual basis, compared to the predicted 7.6% drop. Similarly, imports also fell 6.2% year-on-year, slightly more than the 6% decline expected. China has recorded declining exports every month since May, while the last positive print for imports on a year-on-year basis was in September of last year.
The Monetary Authority of Singapore (MAS) has decided to keep its monetary policy stance unchanged for a second consecutive meeting. The MAS manages monetary policy through exchange rate settings, rather than interest rates. Its approach involves guiding the Singapore dollar against a basket of currencies, adjusting the pace of its appreciation or depreciation as necessary. Despite muted near-term prospects for the Singapore economy, the MAS expects improvement in the second half of 2024.
Singapore’s GDP grew faster than expected in the third quarter, expanding by 0.7% on a year-on-year basis, according to government estimates. The construction sector played a crucial role in driving growth, growing by 6% compared to the previous quarter. However, the manufacturing sector contracted by 5% due to output declines in all clusters except for transport engineering. On a quarter-on-quarter seasonally adjusted basis, Singapore’s GDP grew by 1%.
In India, inflation eased to a three-month low of 5.02% in September, primarily driven by lower vegetable prices. The reading was below expectations and remains above the central bank’s target of 4%. Last week, the Reserve Bank of India kept interest rates unchanged at 6.5%.
Wolfe Research chief investment strategist Chris Senyek believes that the Federal Reserve will need to see core inflation break below 4% and continue trending downward before pausing and remaining on hold for a prolonged period. In the medium term, Senyek expects the lagged effect of the Fed’s rate hikes to lead to economic disappointments, rising recession concerns, and a downward earnings per share revision cycle. Declining interest rates will likely be insufficient to offset this downward bias.
AllianceBernstein is bullish on India, citing stronger economic growth, accelerating government spending, and a bottoming out of inflation. The asset management firm expects India to provide one of the highest returns among key markets worldwide over the next few years. Some of AllianceBernstein’s favorite stocks in India include two newly identified names.
Deepwater Asset Management has identified an under-the-radar AI stock essential for the long-term infrastructure rollout of artificial intelligence. With strong rallies in AI-related stocks this year, this particular stock could play a crucial role in AI development.
Oil prices experienced a bounce-back, with U.S. benchmark West Texas Intermediate crude rising 1.6%. However, concerns about demand continue to keep prices in check. A surprising gasoline build in the United States last week has helped to offset fears of potential disruptions in the global oil supply.
Investec analysts predict that British footwear brand Birkenstock’s recent IPO will boost shares of another footwear stock by 65%. Birkenstock’s successful listing on the New York Stock Exchange has inspired optimism in the industry.