Hong Kong stocks drop 2.5% as Tencent slashes Meituan stake; Japan posts $15 billion trade deficit

Soegeefx AppsAsia MarketHong Kong stocks drop 2.5% as Tencent slashes Meituan stake; Japan posts $15 billion trade deficit

Jihye Lee

Shares in the Asia-Pacific traded mostly lower with the Hang Seng Index falling 2.5% in its first hour of trade, as technology stocks saw sharp losses after Tencent announced to slash its over $20 billion-stake in Meituan.

In mainland China, the Shanghai Composite fell 0.6% and the Shenzhen Component also fell 0.931%. Australia’s S&P/ASX 200

was about flat as the nation reported its latest unemployment numbers.

In Japan, the Nikkei 225 shed 0.39% while the Topix gained 0.14% as the country reported a trade deficit of $15.5 billion, bigger than forecasted in a Reuters poll. South Korea’s Kospi fell 0.9% after a delayed open due to national scholastic exams.

.N225 Nikkei 225 Index *NIKKEI 27953.6 -74.7 -0.27
.HSI Hang Seng Index *HSI 17915.01 -341.47 -1.87
.AXJO S&P/ASX 200 *ASX 200 7129.7 7.5 0.11
.SSEC Shanghai *SHANGHAI 3102.92 -17.06 -0.55
.KS11 KOSPI Index *KOSPI 2455.57 -21.88 -0.88
.FTFCNBCA CNBC 100 ASIA IDX *CNBC 100 7693.9 -97.01 -1.25

Economic leaders of the region will gather in Thailand for the Asia Pacific Economic Cooperation (APEC) summit. Indonesia’s central bank continues its two-day meeting today — economists are expecting the benchmark interest rate to be raised by 50 basis points to 5.25%.

Overnight on Wall Street, U.S. stocks fell as investors weighed a gloomy fourth-quarter outlook cut from Target – triggering sharp losses in its stock price as well as other industry peers.

— CNBC’s Tanaya Macheel and Samantha Subin contributed to this report.

Meituan shares drop 6% after Tencent slashes stake

Hong Kong-listed shares of Meituan fell more than 6% in the first hour of trade after Tencent

said it would offload 958.1 million shares in the form of a special dividend to shareholders.

Tencent said the tranche of shares is roughly 90.9% of its stake in the company and 15.5% of total shares Meituan has issued as of Oct. 31. Tencent said the stake was worth about 159 billion Hong Kong dollars (roughly $20.32 billion) as of the Tuesday close.

Shares of Tencent also fell more than 3% in the first hour of Hong Kong trade. The company posted a drop in quarterly revenue after the close on Wednesday.

–Jihye Lee

Australia unemployment rate slightly falls to 3.4%

Australia’s unemployment came in at 3.4% in October, slightly lower than 3.5% a month ago, according to the Australian Bureau of Statistics.

The nation saw a total increase of 16,800 in its net employment numbers from the previous month, the release said.

The latest numbers follow a 1% increase in wages reported for the latest quarter, seeing the highest growth recorded since the quarter of March 2012, according to a separate ABS release.

– Jihye Lee

Temasek writes down full FTX investment, says it has no direct exposure in crypto

Singapore’s sovereign wealth fund Temasek announced it will write down its full investment in FTX after the firm’s rapid collapse last week.

The state investor said in a release that “in view of FTX’s financial position, we have decided to write down our full investment in FTX, irrespective of the outcome of FTX’s bankruptcy protection filing.”

Temasek said its cost of investments in FTX was less than 0.1% of its net portfolio value of 403 Singapore dollars ($294 billion) – holding less than 1% in FTX International and less than 1.5% in FTX US.

“There have been misperceptions that our investment in FTX is an investment into cryptocurrencies. To clarify, we currently have no direct exposure in cryptocurrencies,” the company said.

– Jihye Lee

Japan reports larger-than-expected trade deficit of $15 billion

Japan reported a larger-than-expected trade deficit of 2.16 trillion yen ($15.5 billion), according to the latest release by its Ministry of Finance. Economists were expecting a deficit of $11 billion, according to a Reuters poll.

Exports rose by 25.3% to 9 trillion yen in October compared to the same period last year, while imports jumped 53.5% to 11.16 trillion yen.

–Jihye Lee

Retail stocks remain under pressure following Target warning, with some bright spots

Several retail stocks were down on Wednesday morning following Target’s weak financial results and sales outlook.

Target itself was down 15% shortly after the opening bell. Nordstrom suffered a 9% decline, while Macy’s and Gap each fell roughly 7%.

The SPDR S&P Retail ETF was down by 3.9%.

The SPDR S&P Retail ETF (XRT) on Wednesday Chart

Lowe’s shares were higher, however by 3.8% after the company reported raised its full-year earnings forecast and reported strong results. Walmart held onto a 1% gain after reporting strong results Tuesday. Costco fought its way into positive territory.

— Tanaya Macheel

Treasury yields slide, recession worries rise

The 10-year Treasury yield temporarily sank below 3.7%, and the spread between it and the 2-year yield continued to fall deeper into negative territory.

That so called yield inversion is a warning of recession. The 10-year was 3.73% in afternoon trading, after dipping to 3.69%. The 2-year Treasury was at 4.35%.

“I still think there’s more downside risk for rates from here. The curve inversion 2s/10s is negative 67. That could get to negative 75 in the near term,” said Ian Lyngen at BMO.

He said a next target for the 10-yea yield would be 3.55%. Yields move lower as bond prices rise.

“A large impetus behind the rally is the market looking past the current tightening cycle and beginning to grow increasingly jittery about the potential for a more significant fallout, as the Fed continues to reiterate its willingeness to hike the economy into recession,” said Lyngen.

—Patti Domm

Tencent to report earnings, reportedly starting new round of job cuts

Chinese tech giant Tencent is due to report third-quarter earnings late in Asia.

The company is expected to see another drop in revenue after posting the first-ever revenue decline in the previous quarter ending in June. A median forecast from Refinitiv predicts a fall of 0.47% to 141.7 billion Chinese yuan ($20 billion).

Separately, sources told Reuters that Tencent is starting a new round of job cuts. The news comes as tech firms around the world announce layoffs.

Tencent shares rose as much as 3% in early trade, and were last up 0.83%, compared with a 0.81% fall in the broader Hang Seng index.

— Abigail Ng, Jihye Lee

Source : CNBC

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