WORLDWIDE: HEADLINES
Exports Likely Buoyed S.Korea GDP Growth In Q4, Braking China Dims Outlook
South Korea’s economy likely accelerated in the last quarter, buoyed by strong exports and investments, but an economic slowdown in China and surging COVID-19 cases pose a significant risk, a Reuters poll found.
Asia’s fourth-largest economy is expected to have expanded a seasonally-adjusted 0.9% in the fourth quarter, according to the median forecast of 10 economists, up from a 0.3% rise in the preceding quarter.
However, the survey showed growth in annual terms likely slowed to a median 3.7%, based on a higher sample of 16 economists, from 4.0% in the third quarter, partly due to the above-trend expansion registered in the comparable period in 2020.
The data will be released on Jan. 25.
“It is highly probable private consumption has weakened somewhat due to the re-spread of the COVID-19 in Korea, but solid exports and investments supported growth in Q4,” said Chun Kyu-yeon, an economist at Hana Financial Investment in Seoul.
South Korea’s recovery from a pandemic-induced economic slump has been largely driven by robust exports, which expanded at their fastest pace in 11 years in 2021. By destination, exports to China, the United States and the European Union rose 22.9%, 29.4% and 33.9%, respectively.
But an upsurge in COVID-19 cases, the waning effects of pandemic-related stimulus and an economic slowdown in China, the country’s largest trade and investment partner, will weigh heavily on the economy this year and next.
Full coverage: REUTERS
Pegasus Asia, Tikehau Capital-backed SPAC, Debuts In Singapore
A special purpose acquisition company (SPAC), backed by European asset manager Tikehau Capital (TKOO.PA) and a holding firm of LVMH Chairman Bernard Arnault, started trading in Singapore on Friday, the second SPAC to debut in the city-state.
The twin listings also mark the first major debut of such vehicles in Asia since a SPAC frenzy in the United States in early 2021 prior to regulatory change there dampening investor sentiment.
On Thursday, Vertex Technology Acquisition Corp , a SPAC backed by Vertex Holdings – in turn owned by state investor Temasek (TEM.UL) – became the first such structure to list on the local bourse.
Pegasus Asia raised S$170 million ($126 million) and plans to invest in tech-enabled sectors. It traded little changed from its offer price of S$5 per unit after the issue was heavily oversubscribed.
“We will immediately focus on seeking suitable targets for the business combination,” Pegasus Asia CEO Neil Parekh said at a listing ceremony on Friday.
“The strong growth in technology-enabled sectors across the Asia Pacific region has nurtured many companies with disruptive business models in the new economy which are suitable (merger) candidates,” he said.
Singapore Exchange, which allowed SPACs or shell firms to list after easing proposed rules in response to market feedback, aims to become a key venue for SPAC listings.
Full coverage: REUTERS
WORLDWIDE: FINANCE/MARKETS
Asian Markets Fall After Weak Showing On Wall St, Oil Tumbles
Asian share markets and U.S. futures fell on Friday, after U.S. stocks took a knock overnight, hurt by lingering concerns over the Federal Reserve’s tightening and weaker-than-expected economic and earnings data.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was down 0.8%, and Japan’s Nikkei (.N225) slid 1.66%. Oil prices fell sharply and were on track for their first weekly loss this year.
“The selloff of U.S. stocks yesterday was brutal and will dominate Asia this morning,” said Rob Carnell, chief economist at ING in Singapore.
“But there are pockets of optimism like China’s more accommodating moves on monetary policy,” he added.
The Nasdaq (.IXIC) dropped late in the U.S. session, to close 1.3% lower, as investors anxiously await the Fed’s policy meeting next week for details on how it intends to tackle inflation.
Nasdaq futures were down 1% in Asian trading, hurt by Netflix Inc forecasting weak first-quarter subscriber growth after the close.
The moves extended to Chinese shares with the Hong Kong benchmark (.HSI) losing 0.24% after posting its best day in six months the day before and Chinese blue chips (.CSI300) losing 0.5% also after gains the day before.
China cut its benchmark mortgage rates on Thursday, the latest move in a round of monetary easing aimed at propping up an economy soured by the country’s troubled property sector and worries over the Omicron variant of coronavirus.
Full coverage: REUTERS
Safe-haven Yen Gains Against Aussie As Risk Sentiment Sours
The safe-haven yen gained versus the riskier Australian dollar on Friday as risk sentiment soured amid rekindled fears of heated inflation and aggressive Federal Reserve policy tightening.
The dollar took a breather from recent gains as a rally in U.S. Treasury yields stalled, but was still headed for its best week in two months against a basket of major peers.
The Aussie – often considered a liquid proxy for risk appetite – sank as much as 0.57% to 82.02 yen, its weakest level in a month, and was last down 0.32% at $0.72035.
The greenback slipped 0.15% to 113.915 yen, a one-week low.
Overnight, Wall Street suffered a sharp selloff in the final hours of trading, while Treasury yields retreated from multi-year highs. S&P 500 futures point to a further 0.5% retreat at the reopen.
The advance in U.S. yields has been driven by market expectations that the U.S. Federal reserve will tighten monetary policy at a faster pace than anticipated. Fed funds futures have fully priced in a rate increase in March and a total of four in 2022.
The Federal Open Market Committee (FOMC) convenes a two-day policy meeting starting Tuesday, at the conclusion of which market participants will closely parse the committee’s statement regarding the tightening timeline.
The dollar index – which measures the currency against six rivals – was 0.03% higher at 95.795 after touching a more than one-week high of 95.864 on Thursday. For the week, it is up 0.65%, rebounding from last week’s 0.61% slide.
Full coverage: REUTERS
Oil Falls As U.S. Inventory Build Prompts Profit-taking
Oil prices plunged on Friday, after rising to seven-year highs this week, as an increase in U.S. crude and fuel stockpiles prompted investors to take profits from the rally.
Brent crude futures dropped $2.46, or 2.8%, to $85.92 a barrel by 0136 GMT. The contract earlier fell by as much as 3%, the most since Dec. 20. The global benchmark touched $89.50 a barrel on Thursday, its highest since October 2014.
U.S. West Texas Intermediate (WTI) crude futures slid $2.61, or 3.1%, to $82.94 a barrel. The contract earlier fell as much as 3.2%, also the most since Dec. 20, after rising to its highest since October 2014 on Wednesday.
The recent rally in crude prices appeared to run out of steam on Thursday when Brent and WTI ended the trading session with slim losses. Both benchmarks have gained more than 10% so far this year amid concerns over tight supply.
“Investors made short-term adjustments in their positions after an increase in U.S. inventory and ahead of the weekend,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Gasoline inventories in the United States, the world’s biggest oil consumer, rose by 5.9 million barrels, to their highest since February 2021, according to the U.S. Energy Information Administration (EIA). Crude stockpiles rose by 515,000 barrels last week, against industry expectations.
The EIA also reported a slight decline in refinery runs, indicating lower demand for crude.
Oil supply concerns mounted this week after Yemen’s Houthi group attacked the United Arab Emirates, OPEC’s third-largest producer, while Russia, the world’s second-largest oil producer, has built up a large troop presence near Ukraine’s border, stoking fears of invasion.
Full coverage: REUTERS
