Asia-Pacific markets trade lower after Wall Street cools following Fed minutes

Chinese developer Country Garden has issued a profit warning projecting its net profit for the first half of the year to fall below half of last year’s result.

It estimated its net profit to sit between 4,500 million yuan and 5,000 million yuan ($660 million and $730 million), down from last year’s 15 billion yuan ($2.21 billion).

The company attributes the fall in profit to a decrease in property sales, increased provision for impairment for property projects and foreign exchange losses.

“The Board is of the opinion that most of the above factors affecting profits were non-cash in nature, and the operation of the Group is in good condition with sufficient cash available and cash flow remains stable,” the company said in a statement.

— Su-Lin Tan

The United States and Taiwan have agreed to start discussions over a new trade initiative, the “U.S.-Taiwan Initiative on 21st-Century Trade.”

The office of the U.S. Trade Representative said the two sides had “reached consensus on the negotiating mandate.”

“We plan to pursue an ambitious schedule for achieving high-standard commitments and meaningful outcomes covering the eleven trade areas in the negotiating mandate that will help build a fairer, more prosperous and resilient 21st-century economy,” Deputy United States Trade Representative Sarah Bianchi said in a statement.

There was no mention of a possibility of a free trade deal.

This follows U.S. House Speaker Nancy Pelosi’s recent controversial visit to Taiwan. And comes on the back of Washington’s economic pivot to Asia, that led to the launch of the Indo-Pacific Economic Framework, which did not include Taiwan.

— Su-Lin Tan

Coca-Cola and Grab, Southeast Asia’s leading ride hailing and delivery app have announced a partnership to launch and engaging consumers through GrabAds.

The partnership will take place across six Southeast Asian countries that is, Singapore, Indonesia, Malaysia, Thailand, Philippines and Vietnam. 

— Su-Lin Tan

Nomura cut its forecast for China’s 2022 GDP even further, from 3.3% to 2.8%, citing latest economic data out of the country.

The latest move continues the bank’s streak of having one of the lowest calls among its peers, echoing pessimism over Beijing’s growth target of around 5.5%. In July, Chinese officials indicated the country might miss its GDP goal for the year.

Nomura credits worsening downswings in the current business cycle as well as China facing its worst heatwave in many years, which could dent growth in the third quarter.

Goldman Sachs also downgraded its forecast to 3% from 3.3% — citing latest data showing a slump in demand and sluggish credit growth. The report also emphasized the drag from the slump in the property sector.

The forecast reductions come after the People’s Bank of China unexpectedly cut two interest rates on Monday — its medium-term policy loans and a short-term liquidity tool — for the second time this year.

— Jihye Lee

Australia’s unemployment rate has fallen to 3.4% in July, the lowest since 1974, according to the latest data released by the Australian Bureau of Statistics. It fell from 3.5% in June.

“The fall in unemployment in July reflects an increasingly tight labor market, including high job vacancies and ongoing labor shortages, resulting in the lowest unemployment rate since August 1974,” Bjorn Jarvis said. 

“In July, there were fewer unemployed people (474,000) than there were job vacancies (480,000 in May).”

A tighter employment market could prompt further demand and inflation as well as further rate increases.

In the Reserve Bank of Australia’s meeting minutes this week, the bank said “employment growth could be stronger than expected, and strong household balance sheet positions could support household consumption by more than anticipated”.

—Su-Lin Tan

PayPal has lost nearly half its market cap this year — and that’s despite a strong rally over the past month.

But top tech investor Paul Meeks is still a fan of the online payments giant. He tells CNBC Pro Talks why he thinks the stock is a buying opportunity.

Pro subscribers can read the story here.

— Zavier Ong

The energy efficiency improvements that companies carry out will be increasingly important to investors, according to Goldman Sachs.

“Carbon is increasingly becoming a factor that impacts stock selection and equity valuation, driven by growing regulatory pressure and net zero investment strategies,” the investment bank wrote in a recent August report.

Goldman identified buy-rated companies which rank well on their reductions in energy usage, and where it says energy efficiency will play a key role in the companies’ competitive positioning in the long term.

Pro subscribers can read more here.

— Weizhen Tan

China is battling a power outage in the Yangtze river area, which is experiencing a record-breaking heatwave.

Top temperatures have disrupted crop growth and threatened livestock.

China’s southwestern province Sichuan is also rationing power amid blackouts that has swept across homes and businesses.

The latest blackouts were reminiscent of the major blackout last year that enveloped many of China’s key manufacturing hubs particularly in the south such as Guangdong.

The power outage had contributed to a slowdown in GDP growth in the third quarter of the year, China’s National Bureau of Statistics said at the time. It said power rationings in parts of China had impacted “normal production.”

Chinese vice premier Han Zheng visited the State Grid Corporation on Wednesday and called for more efforts to shore up power supply for residents and key industries, a state media report said.

— Su-Lin Tan

The minutes from the Federal Reserve’s July meeting shows that central bankers plan to continue rate hikes in order to bring down inflation.

“With inflation remaining well above the Committee’s objective, participants judged that moving to a restrictive stance of policy was required to meet the Committee’s legislative mandate to promote maximum employment and price stability,” the minutes said.

The Fed has hiked by three quarters of a percentage point at each of its last two meetings. However, the central bank signaled that it could slow that pace in the coming months as those historically large moves take full effect.

“Participants judged that, as the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation,” the minutes said.

Some of the meeting participants indicated that the Fed should keep rates at a restrictive level “for some time” even after slowing the hikes.

The minutes also showed that Fed is worried about inflation and the economic environment possibly worsening from here.

“Uncertainty about the medium-term course of inflation remained high, and the balance of inflation risks remained skewed to the upside, with several participants highlighting the possibility of further supply shocks arising from commodity markets,” the minutes said. “Participants saw the risks to the outlook for real GDP growth as primarily being to the downside.”

— Jesse Pound