Forex Analysis & Reviews: 25.07.2022 - Asian stocks shows mostly...

25.07.2022 11:35 PM

Asian stocks shows mostly decline to 1%

Asian stocks mostly decline to 1% at the beginning of the week. The Australian S&P/ASX 200 fell least of all - by only 0.01%, all other indicators showed a greater fall. Thus, the Shanghai Shanghai Composite, the Hong Kong Hang Seng Index and the Japanese Nikkei 225 showed approximately the same decrease: the first by 0.71%, and the latter by 0.75% each. The Shenzhen Composite fell the most, down 0.97%, while South Korea's KOSPI edged up 0.69%.

The main negative factor affecting investor sentiment and their attitude to risk is the fear of a recession in the global economy. And it is not unfounded, since the European Central Bank meeting was already held last week, at which the central bank decided to raise the base rate by 50 points at once. This happened for the first time in more than 10 years and exceeded the forecasts of experts who had expected an increase of 25 points.

This week, the US Federal Reserve will hold a meeting at which a decision will also be made to raise the key rate. The vast majority of experts believe that the rate will be raised by 75 basis points, as at the June meeting. However, there is a possibility that the central bank will decide to raise the rate by 100 points at once.

Another negative factor for Asia-Pacific indicators was a significant decline in the US NASDAQ indicator (by 1.9%).

The value of securities of Chinese companies is falling due to fears for the recovery of the country's economy amid another wave of coronavirus in the country. Energy and tech stocks lost the most in value, with Contemporary Amperex down 1.8%, BYD Company down 2.8%, Longi Green Energy down 2.1%, and TCL Zhonghuan and East Money down 3.7% % and 2%, respectively.

At the same time, the value of shares of other Chinese companies is rising due to the announcement of the government's intention to establish a real estate fund to support companies in the construction and real estate sectors. The authorities plan to invest up to 300 billion yuan in this fund. Poly Developments and China Baoan rose 3%, while Jiangsu Dagang added 10%.

Of the components of the Hang Seng Index, Alibaba Holdings, down 1.5%, and Li Auto, down 2.8%, showed the biggest declines.

After the announcement of the departure from his post of the current CEO and CFO of China Evergrande, its stock quotes decreased immediately by 11%.

Among the components of the Japanese Nikkei 225, there is also a decrease in quotes. So, the price of shares of Tokyo Steel decreased by 7.6%, despite the fact that the company managed to increase net profit by 87%, to 6.81 billion yen.

However, this was worse than expected by investors, who had forecast an increase to 7.10 billion. The company also managed to increase revenue by 71% in the second quarter, to 90.65 billion yen.

The value of shares of companies in the technology sector also fell: Keyence securities fell 2.1%, Recruit Holdings - 2.5%, Lasertec - 1.4%, and Murata Manufacturing and Renesas Electronics - 1.2% and 1.6 % respectively.

Other large companies also showed a decrease in the value of securities: Fast Retailing by 0.4%, Toyota Motor by 1.8%, and Sony Group by 2.5%.

Amid an increase in the value of securities of the companies included in the KOSPI indicator, the indicator itself also increased. Samsung Electronics rose 0.8% and Hyundai Motor rose 2.6%.

The most stable was the Australian indicator. One part of the securities included in its calculation showed an increase, the other - a decrease. Thus, the largest companies in the mining sector grew: BHP Group - by 1.6%, Fortescue Metals - by 2.4%, and Rio Tinto - by 1.3%.

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