Real estate stocks decline in Hong Kong, inflation rises in Australia

SINGAPORE – Hong Kong real estate stocks fell as Asia-Pacific markets were mixed on Wednesday. Inflation is rising in Australia and investors are looking forward to the Federal Reserve’s policy decision.

Country Garden Real Estate Co fell 15.05 percent after it said it would raise 2.8 billion Hong Kong dollars ($360 million) by selling 870 million new shares.

Shares were priced at HK$3.25, a discount of about 12.63% from Country Garden’s closing Tuesday.

Hang Seng Mainland Properties is down 6.29%.

Hong Kong’s Hang Seng fell 1.13% to 20,670.04, and Hang Seng Tech was down 1.3%. Heavyweight Alibaba stock fell 3.26% in the afternoon Tuesday after it announced plans for a dual primary listing in Hong Kong.

Elsewhere in Asia, Japan’s Nikkei 225 rose 0.22% to 27715.75, while Topix rose 0.13% to 1,945.75.

Mainland China markets were moderately low. The Shanghai Composite fell about 0.05% to 3,275.76 and the Shenzhen Component lost 0.07% to 12,399.69.

In Australia, the S&P/ASX 200 advanced 0.23% to close at 6823.2.

We expect any effects on the Aussie from today’s CPI to be short-lived as the bleak global outlook will carry more weight on the AUD.

Christina Clifton

Economist, Commonwealth Bank of Australia

South Korea’s Kospi Index rose 0.11% to 2415.53, while the Kosdaq Index rose 0.73% to 795.7.

MSCI’s broadest index of Asia Pacific shares outside Japan was 0.45% lower.

Australia CPI

Prices in Australia rose 6.1% in the second quarter compared to the same period last year, up from 5.1% in the first quarter of the year. Economists polled by Reuters saw inflation hit 6.2%.

Christina Clifton, chief economist at the Commonwealth Bank of Australia, wrote in a note before the announcement that a CPI reading down could affect market expectations for a future rate hike.

“We expect any effects on the Australian dollar from today’s CPI to be short-lived as the bleak global outlook will carry more weight on the Australian dollar,” she wrote.

The International Monetary Fund on Tuesday lowered its forecast for global GDP for 2022 and 2023. It now expects growth to reach 3.2% this year, 0.4 percentage points lower than its April forecast.

The Australian dollar weakened to $0.6927 after the release of the inflation reading.

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US stocks fell overnight after Walmart cut its earnings forecast.

The Dow Jones Industrial Average fell 228.50 points, or 0.71%, to 3,1761.54 points. The S&P 500 fell 1.15% to 3,921.05, while the Nasdaq Composite was down about 1.87% to 11,562.57.

The Federal Open Market Committee began its meeting on Tuesday and will continue on Wednesday.

Expectations for a movement of 75 basis points were at 75.1%, according to CME Group’s FedWatch Tool.

In corporate news, chip maker SK Hynix reported a 56% growth in operating profit to KRW 4.2 trillion ($3.2 billion) in the second quarter of 2022 compared to last year. The company said in a statement that revenue jumped 34% to 13.8 trillion won, boosted by the “continued appreciation of the US dollar.”

But SK Hynix expects memory demand to slow in the second half of the year because PC and smartphone shipments are expected to be lower than initial forecasts.

The company’s stock closed down 0.5%.

Mining company Rio Tinto reported earnings after the market closed in Australia. Net profit fell to $8.9 billion in the first half of 2022, compared to $12.3 billion in the same period in 2021.

Currency and oil

The US Dollar Index, which measures the greenback against a basket of peers, was at 107.038, above Tuesday’s levels.

The Japanese yen fell to 136.92 against the dollar.

US West Texas Intermediate crude futures rose 0.61% to $95.56 a barrel, while Brent crude futures rose 0.37% to $104.79 a barrel.

– CNBC channel Tanaya Machel, Sarah Min and Karen Gilchrist contributed to this report.

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