China markets lead losses in Asia-Pacific despite government pledge to stabilize economy

Demand for office spaces in Hong Kong has remained low as the city continues to grapple with high interest rates, said Marcos Chan, executive director and head of research of real estate consultancy CBRE Hong Kong.

“That’s because of the recent interest rate hike, which affects a lot of the investment momentum,” Chan told CNBC’s “Squawk Box Asia” on Monday, adding that sentiment is relatively slow at the moment.

Hong Kong’s central bank raised interest rates last Thursday by 50 basis points to 4.75%, moving in lockstep with the U.S. Federal Reserve.

While office space vacancy remains high, investors are seeing more “positive stories” for properties related to Hong Kong’s retail, hotel and industrial markets, Chan said.

— Charmaine Jacob

The Bank of Japan is expected to keep its interest rates steady at -0.10%, according to survey of economists by Reuters.

The rate decision is expected after the central bank’s two-day monetary policy concludes Tuesday.

Separately, Japan’s government and the BOJ are reportedly aiming revise a statement committing to a 2% inflation target at the earliest possible date, according to Kyodo News, citing government sources.

The Japanese yen strengthened against the U.S. dollar during Asia’s afternoon, and last stood at 135.95.

— Jihye Lee

Business sentiment in China fell to the lowest ever recorded by the World Economics Sales Managers Survey since the survey began in 2013.

The all-sectors index on business confidence in China fell to 48.1 in December, according to a survey conducted by the organization.

“The survey suggests strongly that the growth rate of the Chinese economy has slowed quite dramatically, and may be heading for recession in 2023,” it said in the report.

“The lights may not have gone out, but prospects for economic growth in 2023 have certainly dimmed.”

— Jihye Lee

Oil futures rose in Asia’s morning trade as optimism over China’s reopening leading to a recovery in demand outweighed recession fears.

Futures of Brent crude gained 1.16% to stand at $79.96 a barrel, while U.S. West Texas Intermediate futures rose 1.18% to trade at $75.17 per barrel.

China recently issued plans to increase flights to accommodate a rebound in travel for the upcoming Lunar New Year holidays, Caixin reported last week.

The report said that officials have laid out plans to target almost 90% of pre-pandemic levels by the end of January.

— Jihye Lee

Hong Kong-listed Macao casino stocks fell in Asia’s morning session despite winning 10-year concessions to operate their integrated resorts.

A concession essentially is an operating agreement with the government, which in turn, licenses the operators.

Wynn Macau fell 8%, while MGM China lost about 12%. Sands China also fell 4% and Galaxy Entertainment lost 3%.

The moves come as media reported a rising death toll observed in Beijing and as Shanghai ordered lockdowns for schools, dampening investors’ sentiment on China’s reopening path.

— Jihye Lee, Contessa Brewer

China will prioritize stabilizing its economy and ramping up policy adjustments in order to meet key targets set for 2023, state media Xinhua News Agency reported last week, marking the conclusion of the annual Central Economic Work Conference.

“The proactive fiscal policy should be stepped up for its effectiveness, with a better mix of tools including fiscal deficits, special-purpose bonds and interest subsidies,” the report said.

Hao Hong of Grow Investment Group said while he expects supportive policies such as interest rate cuts, he doesn’t think it will become its own version of quantitative easing. QE is a policy that the U.S. Federal Reserve has previously taken to stimulate economic activity by increasing cash.

“While some prominent economists are arguing for Chinese QE, recent Central Economic Work Conference suggests a more measured approach,” he said. “We believe that liquidity expansion will be structural and targeted, rather than blanket easing.”

— Jihye Lee

After a tough couple of years for Chinese tech stocks, investors are now hoping that the worst is behind them.

What’s next for the beaten down sector? Goldman Sachs shares its outlook for Chinese tech and reveals how investors can trade the sector in 2023.

Pro subscribers can read more here.

— Zavier Ong

San Francisco Federal Reserve President Mary Daly said Friday she sees the recent inflation news as welcome, but it’s not enough to change her view on where policy needs to go.

The October and November readings for the consumer price index amounted to “good news,” but “we don’t see anything right now but hope in the inflation data, and I get confidence in evidence, not hope. So I’m hopeful we’re on a good truck, but I won’t be confident until I see repeated evidence that inflation is truly back on a path for 2% in the coming years,” Daly said in a conversation hosted by the American Enterprise Institute.

“We are far away from our price stability goal,” she added.

Earlier this week, the Fed raised its benchmark borrowing rate by half a percentage point, the seventh hike of the year that took the funds level to a target range of 4.25%-5%.

Daly, a nonvoter this year on the rate-setting Federal Open Market Committee, said her own expectations of where rates are headed is probably higher than current market pricing. Daly votes again in 2024.

—Jeff Cox

Renewable energy expansion is predicted to grow exponentially over the next five years, according to the International Energy Agency.

The IEA predicted earlier this month that solar and wind power would grow by five times, which is equal to the clean power capacity installed over the past 20 years combined.

Given this outlook for the energy transition to renewable sources, CNBC Pro screened for stocks that could offer opportunities to investors in the sector.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Plans from the Federal Reserve to continue hiking rates into next year heighten the odds of a very difficult downturn ahead, according to Jeremy Siegel, professor of finance at the University of Pennsylvania’s Wharton School of Business.

“I think the Fed is making a terrible mistake,” he told CNBC’s “Squawk on the Street” on Friday. “Their plan, their dot plot, is way too tight. Inflation is basically over, despite the way Chairman [Jerome] Powell characterizes it.”

According to Siegel, the central bank should refrain from hiking further, or keeping rates elevated next year.

“Talk of going higher and staying high in 2023, I think would guarantee a very steep recession,” he said.

— Samantha Subin

UBS upgraded its outlook for China’s 2023 gross domestic product to 4.9%, versus 4.5% previously, according to its chief China economist Wang Tao, citing an earlier and faster reopening in the nation.

Wang said the firm expects a weaker fourth-quarter GDP for 2022, downgrading its full-year forecast to 2.7% from 3.1%, pointing out November’s weakened growth with a recent surge in Covid cases.

The firm added that the Central Economic Work Conference will likely prioritize stabilizing growth as well as supportive macro policies for the upcoming year.

“We expect fiscal policy to stay proactive with small increase of headline deficit and new special LG [local government] bonds, monetary and credit policy to keep supportive with continued ample liquidity but unlikely any additional policy rate cut,” Wang said in the note.

— Jihye Lee