On this Week’s Market Summary:
💡1. Asian economies, particularly China, are well positioned to weather the effects of sharp rises in energy and commodity costs following Russia’s invasion of Ukraine, according to SCB Chairman. European economies are likely to feel greater pressure because of the triple whammy of sanctions on Russia. Beyond the short-term uncertainties, the region should remain “the most dynamic economic area in the world over the medium and long term”, he said. As a major importer of oil and commodities, rising prices may be reflected more in the producer price index in China. Other commodities, including wheat and aluminum, have also seen sharp price jumps since the invasion as investors fear supply chain disruptions associated with the war and a slew of sanctions placed on hundreds of Russian oligarchs and businesses.
💡2. While Japan, South Korea, Singapore and Taiwan have joined in the Western-led sanctions effort, while India and China has refused to condemn Moscow. Being far removed from the conflict, the region is suffering less economic turbulence than Europe, which has more economic links to Russia and is heavily reliant on its energy and supplies of raw materials. Some countries in Asia have even benefited economically. India, for one, has continued buying crude from Russia at discounted prices amid moves by the US to ban all Russian oil and gas imports.
💡3. Chinese stocks are on “cheap sale” after a US$2.4 trillion sell-off in both onshore and offshore markets since Russia invaded Ukraine. What investors cannot price, however, is the risk of sanctions on China’s biggest companies. As a result, investors should favor markets that are least exposed to the secular US geopolitical conflict with Russia and China, according to BCA Research. China has refused to condemn Russia’s military aggression in Ukraine, while also publicly opposing the mounting Western sanctions on the Kremlin. That stance has presented a dilemma for Chinese firms operating in Russia, including Xiaomi, Sinopec and Alibaba Group Holding.
💡4. PAG, one of Asia’s biggest private equity firms, is seeking a listing in Hong Kong to raise fresh funds as the stock exchange embraces more non-traditional entities such as blank-cheque firms to revive the struggling IPO market. The Hong Kong-based money manager oversees about US$50 billion of assets across credit and market, absolute return, real estate, private equity and buyout strategies. Its assets have risen six fold in the past decade, according to its application document. PAG adopts a shareholding structure with weighted voting right (WVR), giving the co-founders 10 times more power over other ordinary shareholders.
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