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Hong Kong Stocks Lead The Way With a 2% Jump as Investors Digest a Slew of Economic Data

Shares in the Asia-Pacific region were mostly higher on Thursday as investors digested a range of economic data.

January 26, 2023
5 minutes
minute read

Shares in the Asia-Pacific region were mostly higher on Thursday as investors digested a range of economic data.

Hong Kong's Hang Seng index rose 2.17% on Wednesday, with the Hang Seng Tech Index leading gains in the region with a 3.96% jump.

After the release of the Bank of Japan's summary of opinions from last week's meeting, the Nikkei 225 and Topix both dipped 0.12% to close at 27,362.75 and 1,878.4 respectively. The Japanese yen last stood at 129.48 against the U.S. dollar.

The Kospi rose 1.6% to end at 2,468, while the Kosdaq added 0.69%. This came even as South Korea's gross domestic product shrank 0.4% in the fourth quarter, marking the first contraction in more than two years.

The Philippines' gross domestic product expanded by 7.2% in the fourth quarter. Hong Kong is set to release trade data later in the day, while Singapore will post its manufacturing output data for December.

Markets in China and Australia are closed today for a holiday.

U.S. stocks dipped overnight, as technology stocks languished following Microsoft’s lackluster guidance.

Toyota Motor Corporation has announced that its President and Chief Executive Akio Toyoda will be stepping down from his role on April 1. He will be replaced by the company's current Chief Branding Officer Koji Sato.

Toyoda will become the new chairman of the board, while the current Chairman Takeshi Uchiyamada will continue as a member of the board. This change will take place on June 29th.

Toyoda said that he thought the best way to further Toyota's transformation would be for him to become chairman in support of a new president. He explained that this has led to today's decision.

Tokyo-listed shares of Toyota ended the session 0.63% lower Thursday. This was ahead of the announcement from the company.

Hyundai Motor reported a net income of 1.71 trillion won ($1.4 billion) for the fourth quarter ending December, a 143.8% increase from the previous year.

Although the results were excellent, they were still below Refinitiv's forecast of 2.5 trillion won in net profit.

The figure also represents a 21.1% growth compared to the previous quarter ending September. This is an encouraging sign for the company's future prospects.

The automaker’s strong sales of sport utility vehicles (SUVs) was a big contributor to the company's overall positive results. Hyundai expects that "strong sales of high-end models will continue."

The company's shares rose 6.04% in Thursday trading.

Singapore's manufacturing output for December fell by 3.1%, which was better than the 6.9% decline that was expected by Reuters.

This is the third consecutive decline in reading scores since October, and comes after November’s figure of a 3.2% dip. This trend is worrying educators who are working hard to improve reading skills among students.

In Singapore, manufacturing output rose by 3.2% on a month-on-month basis in October, compared to a 1.2% decline in September. This was a positive turnaround for the sector, which had seen declining output in recent months.

After returning from the Lunar New Year holidays, the heavyweight stocks of Hong Kong's benchmark Hang Seng Index jumped 1.8%.

Technology company stocks Xiaomi and Lenovo soared today, with Xiaomi up 9.27% and Lenovo up 4.51%. This is good news for investors in these companies, as their stocks have been performing well lately.

Property company shares also saw a lift. Longfor Group saw a 6% climb, while Logan Group rose 7.35%. Country Garden was up 3.13%.

Shares of automotive companies listed on the Hong Kong Stock Exchange surged as well, with BYD gaining 5.83% and Geely rising 4.32%.

According to an earnings forecast from Macquarie’s Capital Head of Mobility Research, James Hong, Hyundai is expected to post a record 3.2 trillion won ($2.597 billion) in operating profit. This would be a significant increase from the company’s previous record of 2.7 trillion won ($2.2 billion), set in 2018.

"Our projections are slightly higher than the market consensus," said Hong. He attributed this to the company's Brazilian production arm driving sales volume growth, as well as foreign exchange tailwinds from the weak Korean won relative to the greenback.

Refinitiv estimates that Hyundai is expected to post a net income of 2.311 trillion won for the fourth quarter, which would mark an 81% increase from the company's third quarter net income of 1,272 trillion won.

Hyundai will be holding its earnings call at 1PM local time.

The company's shares rose by 1.93% in the last trade.

As stocks continue to rise, some of the world's biggest financial institutions are now predicting a sharp drop in global equity markets.

Since October of last year, the S&P 500 index has risen by more than 10%. In Europe, the STOXX 600 has increased by more than 15% over the same period. These are both significant increases, indicating that the market is on the rebound.

However, according to some investment banks, the recent gains in the stock market are now at risk. These banks fear that the lagged effects of monetary tightening will hit earnings and cause compression in profit margins this year.

The Philippine economy grew by 7.2% in the fourth quarter of 2022, beating expectations, according to data from the statistics authority. This strong growth is a positive sign for the country's economy and indicates that it is on the right track.

A recent Reuters poll forecast that gross domestic product (GDP) growth will come in at 6.5% in the last three months of 2022, compared to the same period a year earlier.

The economy expanded 7.6% in 2022, driven by strong growth in sectors such as wholesale and retail trade and repair of motor vehicles and motorcycles. Manufacturing growth was 5% and construction 12.7%.

Alicia Garcia-Herrero, chief Asia economist at Natixis, said on Thursday that domestic consumption is really what matters this year, and that is something the Philippines has. She was speaking to CNBC's "Squawk Box Asia" before the release of GDP data.

I think 2023 will be a good year for the Philippines compared to the rest of the region. The central bank will have to raise interest rates a bit more, but then they will pause. Interest rates are very important for consumption.

She said that interest rates will start to come down next year, which is good news for the Philippines.

At its last meeting, the Bank of Japan stressed the importance of keeping its current monetary policy in place, including leaving the yield curve control unchanged. This was outlined in the Summary of Opinions published by the bank on Thursday.

The Bank said that it needs to continue with the current yield curve control in order to achieve its inflation target of 2 percent in a sustainable and stable manner.

The central bank continued its operations to purchase Japanese government bonds in response to upward pressure on yields. The Nikkei reported earlier this week that the BOJ disclosed holding more than 100% of several key 10-year JGBs – or running higher than the issuance amounts.

The Bank of Japan (BOJ) said in its Summary of Opinions that there has been upward pressure on long-term interest rates, and that the distortions on the yield curve have not dissipated. The BOJ noted that it has a number of options available to keep the yield curve within its tolerance range, including additional purchases of Japanese government bonds (JGBs).

Analysts polled by Reuters expect Singapore's manufacturing output to decline 6.9% year-on-year in December, more than twice the drop recorded in November.

The forecast for the coming months would also extend Singapore’s manufacturing output decline since October, and November’s figure of a 3.2% fall. This would likely have a negative impact on the country’s economy.

Singapore's factory output is expected to drop by 1.1% each month.

South Korea's gross domestic product (GDP) declined by 0.4% in the fourth quarter of 2022 compared to the previous quarter. This marks the first contraction in GDP in South Korea in two and a half years.

Private consumption in South Korea decreased by 0.4% in the second quarter of 2020, while exports and manufacturing both declined by 5.8% and 4.1%, respectively, according to the Bank of Korea.

Government spending increased significantly in the fourth quarter, rising 3.2% compared to a 0.1% increase in the third quarter. This sharp increase in government spending is likely to have a positive impact on the economy.

South Korea's GDP growth for the fourth quarter came in at 1.4%, slightly below expectations. On a year-on-year basis, the economy expanded by 1.4%.

Stocks in certain key sectors that are directly related to China’s reopening, such as domestic consumption and travel, have performed well in recent months.

Investors who are looking for ways to profit from the reopening of the Chinese economy may find that the stocks of companies directly involved in that process are currently overvalued. However, there are other companies that stand to benefit from the reopening of China that may be a better investment at this time. Bank of

America and UBS have identified a number of these companies, which could provide a good opportunity for investors looking to profit from the reopening of China.

The electric vehicle industry is seeing a resurgence, thanks in part to China's reopening. According to one analyst, this trend is expected to continue into the second half of the year. This is good news for the industry, which has seen electric vehicle sales slump in recent years.

Corinne Blanchard, vice president of lithium and clean tech equity research at Deutsche Bank, has named one top stock pick.

On Wednesday, stocks were mixed. Some stocks went up while others went down.

The Dow Jones Industrial Average rose slightly on Wednesday, closing at 33,743.84. The Nasdaq Composite dipped a bit, closing at 11,313.36, while the S&P 500 dipped a fraction of a percent to settle at 4,016.22.

Microsoft shares slid about 1% in after-hours trading, reversing earlier gains. The stock had been up earlier in the day on news that the company would be partnering with Walmart on a new cloud-computing initiative.

After the company posted quarterly earnings per share that beat the Street’s expectations, shares were initially higher. However, after Microsoft issued disappointing guidance for revenue in the current quarter on its earnings conference call, investors’ sentiment soured.

The company forecasted $50.5 billion to $51.5 billion in fiscal third quarter revenue, which is lower than what analysts surveyed by Refinitiv anticipated. Refinitiv's survey showed that analysts anticipated $52.43 billion in revenue for the quarter.

Adan Harris
Managing Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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