Hong Kong stocks lead losses in Asia on China unrest, oil at lowest in 2022

Indian stocks hit fresh highs in the session on Monday.

The Nifty 50, the flagship index of the National Stock Exchange of India, touched 18,611.05, breaching the previous intraday all-time high of 18,604.45 seen on October 19, 2021.

The Sensex touched 62,690.39 in the morning session in India, also surpassing the previous all-time high of 62,447.73 seen on November 25 this year.

The European Union’s proposed price cap on Russian oil is unlikely to be lowered because of opposition from Poland and the Baltic states, according to the Commonwealth Bank of Australia.

Both sides have disputed the proposal’s claims, saying the current offer is too generous and too close to the current price Russia is getting in the market.

Vivek Dhar, CBA’s director of mining and energy commodities research, questioned the feasibility of covering the opposition of more hard-line EU member states.

“We now know that Poland and the Baltic states strongly disagree on how high this price cap should be. But realistically, are we going to see that price lower because of their dissent?” he said on CNBC’s “Street Signs Asia.”

Talks on the price ceiling were postponed until later in the day after discussions on Friday failed to reach a conclusion.

— Lee Ying Shan

It is “not at all” easy to shift production of Apple’s latest Pro iPhones from the Zhengzhou factory, where a worker revolt against China’s zero-Covid policy has damaged supply chains, said Martin Yang, senior emerging technology analyst at investment company Oppenheimer, to CNBC “Street Signs Asia.”

“The iPhone 14 Pro and Pro Max remain exclusively made in Zhengzhou,” he said, noting that some production of lower-end phones like the iPhone 13 and iPhone 14 has been moved to factories in China’s Shenzhen and India.

“That suggests to me that higher-end iPhones have a different set of manufacturing processes that aren’t very easy to transfer elsewhere. And often that involves a lot of customized equipment and trained manpower that is not readily available elsewhere,” Yang said.

However, he said he had “great confidence” that customers would not switch to rival Samsung because of Apple’s “competitive advantage”.

The perceived value of the iPhone compared to Android phones has grown because Apple is able to provide higher-end parts at lower costs while everyone else is squeezed by margins, he said.

— Sheila Chang

Hong Kong-based Casetify is now “close to a billion” in valuation, its co-founder and CEO Wesley Ng told CNBC Make It.

This follows its first fundraising round in 2021 after 10 years in business – where the tech accessories company reportedly won “eight figures” from C Capital.

With global inflation and economic difficulties ahead, Ng said Casetify was “fortunate” not to be heavily backed by ventures, or that would have set the company up for “unrealistic targets”.

“We haven’t invested too much in things in exchange for unnecessary growth. So, very fortunately, we’re healthy, but we remain very cautious.”

Read more about Ng’s multi-million dollar company and his business advice here.

— Go Chiu Tong

China is most likely to reopen around April next year after the Chinese National People’s Congress is held, but there is a chance that authorities will reopen earlier due to difficulties in keeping Covid cases under control, according to Goldman Sachs.

China’s chief economist Hui Shan said there was a 60% chance of the first scenario happening.

“There is also a 30% chance of an earlier reopening precisely because of the difficulty of keeping Covid under control, and the lack of medical training suggests it could be quite a messy process,” she said.

“The medicine is not ready yet because the virus has evolved that way [that] it is becoming very expensive to continue to implement this dynamic zero Covid policy,” she said.

She said policymakers must weigh the costs and benefits of strict Covid restrictions as protests take place across the country.

“It’s not something they’ve experienced before [or] had a lot of experience dealing with in previous cycles,” she said.

— Su-Lin Tan

Both U.S. crude futures and Brent crude futures lost more than 2 percent each in morning trade in Asia as fears of faltering demand from China came into focus.

West Texas Intermediate Futures fell to $73.86 a barrel, the lowest levels since December 2021, while Brent Crude Oil Futures fell to $81.16 a barrel at session lows so far.

WTI was last down 2.58% at $74.31 a barrel, while Brent crude last traded 2.37% lower at $81.65 a barrel.

— Abigail Ng

Chinese household confidence will revive after China reopens, thanks to excess savings and pent-up demand, said BofA Securities chief economist Helen Qiao, a senior China economist.

“We saw year-to-date household savings at the end of October reach about 5 trillion renminbi, compared to a typical year of only about 2 trillion,” she told CNBC’s “Squawk Box Asia.”

“People are reducing their credit, but they are actually increasing household deposits because they have nowhere to spend,” she said.

— Su-Lin Tan

China’s latest move to cut bank reserve requirements by 25 basis points won’t make much of a difference to its economy without a drastic change from strict Covid restrictions, according to the Economist Corporate Network.

“Consumer and investor sentiment has been so damaged by these policies that you won’t see any recovery in any meaningful sense until there is a change,” Matti Beckink, the organization’s China director, told CNBC’s “Squawk Box Asia.” “

Beckink highlighted how sensitive investor sentiment has affected markets before.

“We’ve already seen the markets move quite significantly based mainly on rumors that Beijing is going to relax – that was just a few weeks ago,” she said.

“The lockdowns seem endless and relentless,” Beckink said.

— Jihe Lee

Global currencies will also be at risk of weakening along with the offshore Chinese yuan amid unrest in China over its zero-Covid policies because of how supply chains could be affected, according to Standard Chartered.

“The key question of how the world reacts is how the Chinese supply chain reacts,” Stephen Englander, managing director of Standard Chartered Bank, said on CNBC’s “Squawk Box Asia.”

“If it breaks even further, I think it’s a risky thing to do,” he said. “Not only CNH, but other currencies will be at risk.”

Englander added that traders may be looking to reduce their exposure to additional risk.

— Jihe Lee

According to Plurimi Wealth’s chief investment officer, shares of mass-market retailers will fall as profit margins are squeezed and consumers cut back on spending next year.

Patrick Armstrong told CNBC Pro Talks that he bet against a Japanese retailer, a multinational apparel company and a Canadian e-commerce platform by selling their shares short.

Armstrong believes consumers will hold back on spending next year amid rising interest rates and household bills.

CNBC Pro subscribers can read more here.

– Ganesh Rao

Crude oil futures were lower early in Asia as high Covid cases, virus restrictions and unrest in China stoked fears about demand from the world’s second-biggest oil consumer.

West Texas Intermediate Futures lost 0.35% to $76.01 a barrel, while Brent Crude Oil Futures lost 0.26% to $83.41 a barrel.

Oil prices fell sharply last week as “increasing lockdowns in China stoked demand concerns,” ANZ Research’s Brian Martin and Daniel Hynes wrote in a note on Monday.

“This remains a headwind for oil demand,” they said, adding that the impact of rising Covid cases was also reflected in China’s mobility data.

— Abigail Ng

One Big Tech stock is at an “attractive” price to buy right now, according to Brian Arcese of Foord Asset Management.

Arcese, a portfolio manager at the firm, expects growth in the “mid-teens” despite cyclical industry headwinds.

CNBC Pro subscribers can read more here.

— Weizhen Tan

The offshore Chinese yuan weakened sharply against the US dollar amid negative sentiment surrounding China’s unrest over Covid restrictions.

The currency weakened about 0.8 percent against the U.S. dollar to 7.2529 in morning trade in Asia.

The dollar index rose 0.32% to 106.29, with investors likely seeing the greenback as a safe-haven asset as concerns about China grow.

— Jihe Lee