Asia markets fall as New Zealand hikes rates to 14-year high; Hong Kong releases budget

Increased regulatory scrutiny could impact Coinbase’s business, John Todaro, vice president of cryptoasset and blockchain research firm Needham told CNBC’s “Street Signs Asia” on Wednesday.

Todaro’s comments come after Coinbase CEO Brian Armstrong recently said increased scrutiny “will ultimately benefit” the company after reporting a lower-than-expected revenue on Tuesday.

“You have to take Brian Armstrong’s words a little bit with a grain of salt, because if that regulation comes up to strength, it could impact revenue and verticals,” he said.

“If you get clear rules of the road for these different crypto companies, that would bring greater institutional adoption so institutions aren’t sidelined from the space waiting for that regulatory clarity, at least here in the U.S.,” said Todaro.

Todaro urged the industry to take Armstrong’s words “with a grain of salt” because “if that regulation comes up to strength, it could impact Coinbase’s revenue and verticals”, adding that another crypto exchange Kraken had to cease its U.S. staking business due to an enforcement action by the SEC.

Prices of Bitcoin fell 3.47% and last traded at $24,070.88 and Ether also fell 3.43$ to $1,640.07, according to CoinMetrics.

– Sheila Chiang

Hong Kong’s financial secretary Paul Chan said that HKEX will study a “series of proposals” to improve trading conditions in the city, including measures to allow stock trading during severe weather.

“The HKEX will also study a series of proposals.. which include exploring arrangements for maintaining operation of the market under inclement weathers,” he said, according to excerpts of his speech.

The CEO of Hong Kong Exchanges and Clearing told CNBC in November that the bourse is “constantly” looking to review the protocol of halting trade when authorities issue a typhoon warning of Signal 8 or highter.

– Jihye Lee

Oil prices inched lower as investors look ahead to the minutes of the U.S. Federal Reserve’s latest meeting later in the day for signs of further rate hikes.

Brent crude futures last traded down 0.23% to $82.86 a barrel, while the U.S. West Texas Intermediate futures slipped 0.24% to $76.18 a barrel.

– Lee Ying Shan

Hong Kong’s economy is expected to see a rebound of 3.5% to 5.5% in 2023, after it saw a 3.5% contraction in gross domestic product for the whole of 2022.

Financial Secretary Paul Chan said the “external environment deteriorated markedly” in 2022, adding Hong Kong’s total exports of goods posted a decline of 13.9% in real terms last year.

This was due to “moderated growth” across major economies, decelerated growth in manufacturing and trading activities in Asia, as well as continued disruptions to truck movements between Hong Kong and mainland China caused by the COVID-19 pandemic, he said.

With cost pressures expected to increase alongside economic recovery, Chan forecasted inflation in 2023 to be at 2.9%. Still, he noted that in the medium to long term, Hong Kong’s economy will see “abundant opportunities.”

The Hong Kong economy is expected to grow by an average of 3.7% per annum in real terms from 2024 to 2027. The underlying inflation rate is forecast to average 2.5 per cent per annum.

— Lim Hui Jie

New Zealand’s central bank has raised interest rates by 50 basis points from 4.25% to 4.75, in line with economists expectations.

In a release, the Reserve Bank of New Zealand indicated that interest rates could still rise, to ensure inflation returns to its target range over the medium term.

“While there are early signs of price pressure easing, core consumer price inflation remains too high, employment is still beyond its maximum sustainable level, and near-term inflation expectations remain elevated,” the bank said.

Following the announcement, the New Zealand dollar strengthened against the U.S. dollar to trade at 0.622.

— Lim Hui Jie

Shares of K-pop agency Hybe rose 4% despite the company reporting a 75.9% drop in full-year profit for 2022 compared to a year ago.

Hybe reported a net profit of 33.9 billion won ($26 million), lower than the 140.8 billion recorded in 2021 – while its full-year total revenue grew to 1.78 trillion won, a 41.6% jump from its revenue of 1.26 trillion in 2021.

The entertainment agency recently announced to acquire a 14.8% stake in rival SM Entertainment from SM’s founder and chief producer Lee Soo Man.

Lee made the move after he reportedly took legal action to stop South Korean internet company Kakao from increasing its stake in SM to 9.05%.

— Lim Hui Jie

China’s reopening will eventually bring more Chinese tourists but Singapore Airlines won’t feel the impact until the second quarter of 2023, according to DBS Group research analyst Jason Sum.

His comments came as SIA posted a record quarterly operating profit of $755 million Singapore dollars ($563 million) for the October to December quarter, up more than 11% from the previous quarter.

Speaking to CNBC’s “Squawk Box Asia,” Sum said it’s “not feasible” for SIA to rapidly add flights to China, due to the Covid-19 situation being “slightly unstable” in the country.

He acknowledged that the situation is stabilizing, but said “it is too early at this juncture to rapidly add flights because there will be some hesitation from consumers to travel to China, until things start to look much better.”

In a report Wednesday, Sum maintains his “buy” call and 12-month target price of $6.80 on SIA. He explained that he expects “solid forward earnings momentum” from the airline.

— Lim Hui Jie

Australia’s wage price index released earlier on Wednesday showed the economy is not facing a wage?price spiral, Commonwealth Bank of Australia’s Gareth Aird said in a note.

“Firms that have used bonuses and other one off payments to reward, retain and attract workers, rather than upwardly adjusting base pay have not had a permanent upward adjustment in input costs,” he said.

A wage-price spiral refers to the phenomenon of price increases as a result of higher wages. Australia’s inflation print stood at 7.8% in December, recent data showed.

“As demand in the economy slows these payments can be wound back,” Aird wrote.

– Jihye Lee 

Bank of Japan board member Naoki Tamura said that it is appropriate for the central bank to maintain its current ultra-dovish monetary policy stance, according to a speech.

“At this point, I think it is appropriate to continue with monetary easing,” he said.

He added at some point in the future, it would be “necessary to review” the framework as well as its inflation target “to reassess the balance between the effects and side effects of [the] policy,” he said.

His comments come as the yield on the 10-year Japanese government bond exceeded its upper ceiling of its tolerance range and stood at 0.505% Tuesday morning.

– Jihye Lee

The number of EV-focused exchange-traded funds have grown as interest in the industry booms.

CNBC Pro has attempted to narrow down the list and has identified ETFs that analysts expect to rise by more than 30% over the next year.

CNBC Pro subscribers can read more here about the 12 ETFs.

— Ganesh Rao

Investors are on edge after U.S. stocks fell for three consecutive weeks, signaling the possibility of higher interest rates for longer than expected.

The yield on the 6-month and 1-year Treasury bonds closed at 5% on Friday, thanks to several economic data releases last week that pointed toward a strong U.S. economy.

A rise in bond yields leads to increased borrowing costs for companies, which adds downward pressure on stocks.

Despite this challenging environment, Goldman Sachs remains optimistic and expects a “soft-landing” for the U.S. economy. In this scenario, inflation is controlled with a mild recession at most.

To capture the upside in a soft-landing scenario, the Wall Street bank said that investors should own stocks that can benefit from a decelerating inflation environment.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Australia’s wage price index rose by 3.3%, missing estimates in a Reuters poll, which expected to see growth of 3.5% on an annualized basis.

Compared to the previous quarter, the wage price index rose by 0.8%, also below expectations for a 1% growth.

Private sector’s wage prices gained by 0.8% and the public sector rose by 0.7%, the release said.

– Jihye Lee

Singapore Airlines reported a record operating profit of $755 million for the period between October – December 2022, 11.4% higher than the previous quarter.

In a business update, SIA reported revenue for the quarter came in at $4.85 billion, 8% higher than the quarter before.

Net profit stood at $628 million, compared with $556.5 million the previous quarter.

SIA said group passenger capacity reached 80% of pre-Covid levels, and expects strong momentum in forward passenger sales for the first quarter of 2023.

But it also warned that weaker global demand and increased capacity will weigh on its air freight segment.

— Lim Hui Jie

Alibaba is a Wall Street favorite when it comes to playing the Chinese tech sector and the country’s Covid-19 reopening.

It is rated “buy” by almost all analysts — 93% — covering it, according to FactSet. They give it average potential upside of 43%.

The tech giant is due to report its earnings for the December quarter on Thursday. Here’s what Wall Street is expecting.

— Zavier Ong

Energy storage and the future of transport are two of the “most attractive” climate themes to invest in right now, according to HSBC analysts.

The bank named buy-rated stocks under both of these themes which have among the highest upside to its price targets.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Japan’s producer prices index rose 1.6% on an annualized basis, slightly higher than December’s figure of 1.5%.

This puts the index at 107.4, slightly lower than 107.7 in December, and is the first monthly drop since August 2022.

The PPI measures the average movements of prices received by domestic producers for goods and services sold.

The yen weakened marginally after the announcement to trade against the US dollar at 134.92.

— Lim Hui Jie

U.S.-listed Chinese technology stocks plummeted on Tuesday.

The pullback in shares came amid news that e-commerce company JD.com is reportedly launching a subsidy program to counter its rival Pinduoduo. Shares of both stocks shed more than 11% and 9%, respectively, during afternoon trading.

Others China tech stocks stumbled, including Alibaba, last down 5%. The KraneShares CSI China Internet ETF was last down more than 3%.

— Samantha Subin

U.S. Treasury yields moved past Friday’s highs, hitting their highest levels since November.

The 2-year rate, which is the most sensitive to Fed policy changes, hit a high of 4.725% — a level not seen since Nov. 8, when it reached 4.741%.

The benchmark 10-year rate, meanwhile, rose as high as 3.951%. That’s its highest level going back to Nov. 10, when it climbed to 4.117%.

At 10:22 a.m. ET, the yield on the 2-year Treasury was up 8 basis points at 4.705%.The 5-year Treasury and 10-year Treasury also reached 3-month highs, with yields at 4.142% and 3.927%, respectively.

— Hakyung Kim