Shares in Samsung Heavy, the world’s third largest shipbuilder, plunged by 29% during Wednesday’s trading session after unexpectedly forecasting operating losses this year and 2018 and announcing a capital raise. Meanwhile, Asian equities tumbled, led by technology, mining and industrial companies, with the MSCI Asia Pacific Index falling for eight straight days, its longest run of down days since 2015.
Global shares hit another record high on Wednesday, propelled higher by what increasingly more call (ir)rational exuberance, and investors’ unflagging enthusiasm for tech stocks. That said, S&P futures are unchanged the morning before Thanksgiving (at least before the market open ramp), as are European stocks (Stoxx 600 is flat), despite the euphoria in the Asian session which saw the MSCI Asia Pac index hit a new all time high...
Following the new all-time high in US equities, the MSCI Asia Pacific Index broke through its November 2007 peak to make an all-time high in Wednesday’s trading session. This was something we noted could happen yesterday in “SocGen: Asian Equities Are So Awesome, A China Minsky Moment Is ‘Manageable”. The dollar weakened slightly after outgoing Fed Chairman, Janet Yellen, cautioned against interest rates rising too quickly in one of her last Q&As at NYU on Tuesday evening.
If we’re going to discuss Asian equities in the context of “awesome”, we should begin with Tencent. Tencent, which has more than doubled this year, drove Asian stocks higher during Tuesday’s trading session. Trading on the main board of the Hong Kong Stock Exchange hit a 28-month high of HK$157 billion with one fifth of it in only two stocks – Tencent (HK$21.7 billion) and Ping An Insurance (HK$9.4 billion). It was hardly surprising that shares in Hong Kong Exchanges & Clearing also had a good day, rising 5.5%, the most in more than a year. Tencent’s 2.4% rise pushed it market cap.
The euphoria of the past month has ended with a thud and BTFDers are strangely missing as the commodity chill out of China (which overnight became full blown carnage), has unleashed a global risk-off phase ahead of today's critical CPI data, resulting in broad and sharp selling across global markets, as European stocks followed declines in Asia while bonds and gold advanced. The equity retreat, which spread to U.S. stock futures, started with last night's sharp puke in Chinese commodities.