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

According to the Commonwealth Bank of Australia, the European Union’s proposed cap on the price of Russian oil will not be lowered due to the opposition of Poland and the Baltic states.

Both countries opposed the proposal, saying the current proposal was too generous and too close to the current price Russia was getting in the market.

Vivek Dhar, CBA’s director of mining and energy commodities research, questioned the possibility that it reflected opposition from the EU’s more hawkish member states.

“We know that right now Poland and the Baltic countries have a big disagreement about how high the price ceiling should be. But realistically, will that price go down because of their disagreement?” He said CNBC’s “show the name here.”

Talks on the price ceiling were postponed to a later day after Friday’s talks failed to reach a conclusion.

– Lee Ying Shan

Shifting production of Apple’s latest Pro iPhones from its Zhengzhou factory, where a worker revolt against China’s zero-covid policy has hit the supply chain, is “not going to be easy at all,” Martin Yang, senior analyst for emerging technologies at investment firm Oppenheimer, told CNBC. “Street Signs Asia.”

“The iPhone 14 Pro and Pro Max are manufactured exclusively in Zhengzhou,” he said, adding that some production of lower-end phones such as the iPhone 13 and iPhone 14 has been shifted to factories in Shenzhen, China and India.

“This suggests to me that higher-end iPhones have different production processes that are not very easy to transfer elsewhere. Often this implies highly customized equipment and trained workers that are not available elsewhere,” Yang said.

However, he said he was “highly confident” that consumers would not switch to rival Samsung because of Apple’s “competitive advantage”.

iPhones have become more valuable than Android phones because Apple can secure high-priced parts at low cost, while everyone else is squeezing margins, he said.

– Sheila Chiang

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

It follows its first fundraising in 2021 after 10 years of operation — with the tech accessory company reportedly earning “eight figures” from C Capital.

With global inflation and looming financial crises, Ng said it was “fortunate” that Casetify did not support large-scale ventures, or that it would set the company up for “unrealistic goals”.

“We haven’t overinvested in things to replace unnecessary growth. So fortunately, we’re healthy, but we’re very cautious.”

Read more about Ng’s multimillion dollar company and his business tips here.

– Goh Chiew Tong

China is likely to reopen in April next year after the National People’s Congress, but Goldman Sachs says there is a chance authorities will reopen earlier due to difficulties in controlling Covid cases.

Chief China Economist Hui Shan said there was a 60% chance of the former scenario happening.

“There is a 30% chance of early reopening due to the difficulty of getting Covid under control, and the lack of medical preparedness suggests it will be a very messy process,” she said.

“While the virus has evolved in such a way, medical preparedness is not yet ready [that] “It’s very expensive to continue to implement that dynamic zero-covid policy,” she said.

She said policymakers need to weigh the costs and benefits of stricter Covid restrictions as protests continue across the country.

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

— Su-Lin Tan

U.S. crude futures and Brent crude futures were down 2% each in morning trade in Asia, on concerns of weaker demand from China.

West Texas Intermediate Futures Oil fell to $73.86 a barrel, the lowest level since December 2021. Brent crude futures It fell to a session low of $81.16 a barrel.

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

– Abigail Ng

Helen Qiao, chief greater China economist at BofA Securities, said China’s reopening would revive domestic confidence.

“We saw household savings go up to 5 trillion renminbi by the end of October, only about 2 trillion compared to a normal year,” she told CNBC’s “Squawk Box Asia.”

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

— Su-Lin Tan

According to the Economist Corporate Network, China’s latest move to cut the reserve requirement ratio for banks by 25 basis points will not have much impact on its economy without a major shift away from its strict Covid controls.

“Consumer and investor sentiment has been so damaged by these policies that you’re not going to see any recovery in any meaningful sense until there’s a shift,” Matti Beckinck, the organization’s China director, said on CNBC’s “Squawk Box Asia.”

Beckinck emphasized how sensitive investor sentiment has affected markets in the past.

“We’ve already seen markets move significantly based on basically rumors that Beijing is going to relax — and that was a few weeks ago,” she said.

“Lockdowns seem endless and endless,” Beckink said.

– Jihye Lee

According to Standard Chartered, global currencies along with the offshore Chinese yuan are also likely to weaken amid China’s unease over its zero-covid policies due to how supply chains will be affected.

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

“I think if it gets more disrupted, it’s a risky thing to do,” he said. “Not only the CNH, but other currencies will be at risk.”

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

– Jihye Lee

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

Patrick Armstrong told CNBC’s Pro Talk that he is betting against a Japanese retailer, a multinational clothing 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 fell earlier in Asia as higher Covid cases, virus restrictions and unrest in China raised fears about demand from the world’s second-biggest oil consumer.

West Texas Intermediate Futures Oil fell 0.35 percent to $76.01 a barrel Brent crude futures Oil fell 0.26 percent to $83.41 a barrel.

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

“This remains a blow to oil demand,” she said, adding that the impact of rising Covid cases is also reflected in China’s mobility data.

– Abigail Ng

A big tech stock is now at an “attractive” price to buy, according to Ford Asset Management’s Brian Arces.

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

CNBC Pro subscribers can read more here.

– Weigen Tan

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

The currency fell 0.8 percent to 7.2529 against the US dollar in morning trade in Asia.

The Dollar index Up 0.32% to 106.29, investors may view the greenback as a safe-haven asset as concerns over China grow.

– Jihye Lee