Asia-Pacific markets fall as recession fears grow, China vows to stabilize economy

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

Futures of Brent crude gained 1.16% to face 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 extend flights to accommodate a rebound in travel for the upcoming Lunar Latest Yr holidays, Caixin reported last week.

The report said that officials have laid out plans to focus on almost 90% of pre-pandemic levels by the top 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 federal 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 so as 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 ought to be stepped up for its effectiveness, with a greater mixture 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 comparable to rate of interest cuts, he doesn’t think it can turn into 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 money.

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

— Jihye Lee

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

What’s next for the beaten down sector? Goldman Sachs shares its outlook for Chinese tech and divulges 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, however it’s not enough to alter her view on where policy must go.

The October and November readings for the buyer price index amounted to “excellent news,” but “we do not see anything immediately but hope within the inflation data, and I get confidence in evidence, not hope. So I’m hopeful we’re on truck, but I won’t be confident until I see repeated evidence that inflation is actually back on a path for two% in the approaching years,” Daly said in a conversation hosted by the American Enterprise Institute.

“We’re far-off 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 yr that took the funds level to a goal range of 4.25%-5%.

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

—Jeff Cox

Renewable energy expansion is predicted to grow exponentially over the following five years, based on the International Energy Agency.

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

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

CNBC Pro subscribers can read more here.

— Ganesh Rao

Plans from the Federal Reserve to proceed climbing rates into next yr heighten the percentages of a really difficult downturn ahead, based on Jeremy Siegel, professor of finance on the University of Pennsylvania’s Wharton School of Business.

“I feel 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 largely over, despite the way in which Chairman [Jerome] Powell characterizes it.”

In response to Siegel, the central bank should refrain from climbing further, or keeping rates elevated next yr.

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

— Samantha Subin

UBS upgraded its outlook for China’s 2023 gross domestic product to 4.9%, versus 4.5% previously, based on its chief China economist Wang Tao, citing an earlier and faster reopening within 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%, mentioning 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 in addition to supportive macro policies for the upcoming yr.

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

— Jihye Lee