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Tokyo Inflation Hits 40-year High as Asia-Pacific Stocks Mostly Fall; U.S. Markets Closed

Shares in the Asia-Pacific region were mostly lower on Friday, as markets in the United States were closed for the Thanksgiving holiday and slated to end its session early.

November 25, 2022
8 minutes
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Shares in the Asia-Pacific region were mostly lower on Friday, as markets in the United States were closed for the Thanksgiving holiday and slated to end its session early.

In Japan, the Nikkei 225 fell 0.35% to close at 28,283.03 and the Topix ended its session at 2,018.0 as the nation’s capital city saw the highest core consumer price index reading since 1982. In South Korea, the Kospi fell 0.14% to 2,437 and the S&P/ASX 200 in Australia rose 0.24% to 7,259.5.

Hong Kong's Hang Seng index traded lower by 0.49% to 17,573.58, while the Hang Seng Tech index lost more than 2%. In mainland China, the Shanghai Composite index gained by 0.4% to 3,101.69. However, the Shenzhen Component index lost 0.48% to 10,904.27.

China's reported Covid cases continued to rise on Thursday, with Zhengzhou - where protests took place at Apple supplier Foxconn's iPhone factory - announcing plans for mass testing.

Wood Mackenzie has suggested that the Group of Seven (G7) nations' proposed price cap for Russian oil of between $65 and $70 a barrel may not be a significant deterrent for Moscow.

Wood Mackenzie's vice president of gas and LNG research, Massimo Di Odoardo, said that the planned cap on oil production is not expected to have a significant impact on Russia's oil revenues. This is because the oil prices that Asian markets like China and India are currently paying are already at a "big discount."

"The discounts offered by the Russian government are in line with what is already available in the market. There doesn't seem to be any effect on Moscow if the price is so high."

Hong Kong-listed stocks related to reopening and technology fell in Asia’s morning session following reports of a surge of Covid cases in China. This news caused investors to reconsider their positions in these sectors, leading to a sell-off.

Shares of casino operator MGM China fell more than 4% on Monday, while Wynn Macau lost 2.5%, Sands China fell 3%, and SJM Holdings also lost 2.7%.

Technology stocks such as Tencent, Meituan, and Bilibili all dropped more than 3% in the morning session.

Tokyo's consumer prices rose at a faster-than-expected pace in November, a sign that inflationary pressures are building in the economy.The city's core consumer price index rose 3.6% on an annualized basis in November, higher than the 3.5% increase that was forecast in a Reuters poll.This uptick in inflationary pressure could be a concern for policymakers as they look to keep the economy on track.

The report indicates that Tokyo's inflation rate is the highest it has been since April 1982, and significantly above the Bank of Japan's inflation target of 2%. This represents a significant increase from the previous year and is indicative of the city's continued economic growth.

The capital's reading indicates that inflationary pressures have not yet been tamed. Nationwide, inflation is hovering around similarly high levels.

Patrick Armstrong, chief investment officer at Plurimi Wealth, believes that a margin squeeze is the biggest risk for equities. However, he thinks that some stocks could still perform well despite this trend. He added that the best sectors and stocks are those with defendable margins or that are creating margin squeeze elsewhere.

Next year, global economic conditions are expected to change, which could cause different markets and sectors to underperform, according to the chief strategist of UBS Investment Bank.

Bhanu Baweja told CNBC's "Squawk Box Europe" Wednesday that the expected recession is "an inch deep but a mile wide." He said that global growth is at 2% and that is not priced into stocks. He also predicted which sectors he thinks will do better than others next year.

Malaysian stocks closed higher on Thursday after the state palace announced Anwar Ibrahim as the nation's new prime minister. This news was welcomed by investors, who pushed stocks higher in response.

The benchmark KLCI index ended the session 4.04% higher, at its highest level in more than two months. This followed several previous negative sessions.

Axiata Group Bhd, a telecommunications group, rose more than 12% in the afternoon session. Maxis Bhd also rose 11%. Genting Malaysia climbed around 8%, and rubber glove manufacturer Top Glove also gained 8%.

The Malaysian ringgit strengthened slightly against the U.S. dollar and was last quoted at 4.5080.

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