Stocks Fall as Inflation Expectations Rise

Asian stocks fell after the release of higher-than-expected inflation data for July, which led to increased expectations of interest rate hikes from the U.S. Federal Reserve.

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Asian stock markets fell on Thursday after a rise in U.S. inflation stoked concerns about higher interest rates. The U.S. Labor Department said consumer prices rose 0.6 percent in July, the biggest gain in 11 months. The increase was driven by a jump in the cost of gasoline and other energy products. The data added to fears that the U.S.

This is good news for the gaming industry in China, as it suggests that the regulatory cycle for new games has ended. This should allow for more innovation and growth in the sector, and ultimately lead to better experiences for gamers.

The PCAOB's inspections of accounting firms in Hong Kong could help to improve the accuracy of ADR filings and increase confidence in the market.

As prices for lithium continue to rise, pressure is mounting on battery and new energy vehicle companies. However, Chinese lithium companies are seeing a boost from the news.

As cities across China grapple with affordable housing shortages, the government is taking steps to ease the burden on property companies and help 20 million people find a place to call home. In Suzhou, officials have relaxed restrictions on first home purchases for non-residents, and 40 cities are set to receive 6.5 million units of affordable housing between 2020 and 2025. According to a briefing given yesterday by China's housing ministry, the units will be able to meet the demands of 20 million people. With the government's commitment to solving the affordable housing crisis, Chinese cities are one step closer to providing a safe and stable home for all of their residents.

We believe that China Southern Airlines' approval for a Mainland listing may pave the way for other state-owned enterprises (SOEs) to voluntarily delist from US exchanges. This would allow for audit inspections of China-based companies by the Public Company Accounting Oversight Board (PCAOB) to go forward. We believe this is a positive development that would improve transparency and confidence in China's business practices.

This is great news for hardware companies looking to go public on the Hong Kong Stock Exchange. The new system would slash the revenue requirements, making it much easier for companies to list on the exchange. This is a major competitive advantage for the Hong Kong Stock Exchange compared to other exchanges, such as the US, which have onerous revenue requirements for listed companies.

The Hang Seng and Hang Seng Tech Indexes fell sharply overnight on lower volume, with growth stocks underperforming value stocks. The worst performing sectors were consumer discretionary and information technology, while the best performers were energy and consumer staples. Mainland investors continued to buy Hong Kong shares via the Stock Connect program, injecting a net $632 million into the market.

The Chinese stock markets were mixed overnight, with the Shanghai Composite Index falling by 0.80% and the Shenzhen Composite Index falling by 1.14%. However, the STAR Board Index bucked the trend and rose by 0.01%. Trading volume across all three exchanges declined by 6.92% from the previous day. The performance of different sectors was mixed, with real estate and energy stocks being the best performers, falling by 0.43% and 0.71% respectively. On the other hand, the worst performing sectors were industrials and consumer discretionary, which fell by 2.11% and 1.91% respectively. Foreign investors sold a net $203 million worth of Mainland listed stocks via Northbound Stock Connect. The Chinese currency also fell in value against the US dollar overnight, and is now nearing the psychologically important 7 CNY/USD level.

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Last night's exchange rates, prices, and yields

  • The Chinese yuan continued to strengthen against the US dollar on Wednesday, rising to 6.96 against the greenback.
  • The euro continued its decline against the Chinese yuan yesterday, falling to 6.96 versus 7.04 the previous day.
  • The yield on the 10-year government bond increased slightly yesterday, rising to 2.66%. This is a small but significant increase, and it suggests that investor confidence in the government's ability to repay its debt is rising.
  • The yield on 10-year China Development Bank bonds rose to 2.82% yesterday, up from 2.81% the day before.
  • Copper prices fell overnight, as concerns about the ongoing trade war between the US and China weighed on sentiment.