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Asia shares firm as upbeat China data bucks the bears

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November 15, 2021

By Wayne Cole

SYDNEY (Reuters) – Asian shares crept higher on Monday as Chinese economic data surprised on the high side, challenging assumptions the giant economy was locked into in a downturn although falling mainland house prices remained a nagging worry.

Annual growth in retail sales and industrial output both handily beat forecasts, with the bounce in consumption a positive given pandemic restrictions.

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On a negative note for the stressed housing market, new home prices in China fell 0.2% month-on-month in October, the biggest decline since February 2015.

Economists at CBA argued there was a chance the People’s Bank of China would cut bank reserve requirements (RRR) this week to support activity.

“We estimate a 50 basis point cut to the RRR can release CNY 1 billion of liquidity,” they said in a note “In our view, mild easing measures can help meet funding requirements for property developers and offset downside risks to the economy.”

Chinese blue chips were a fraction lower after the data, while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%.

Japan’s Nikkei gained 0.5% as data showing economic activity shrank by more than expected in the third quarter only reinforced the case for aggressive fiscal stimulus.

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S&P 500 futures firmed 0.1%, while Nasdaq futures added 0.2%. EUROSTOXX 50 futures and FTSE futures were both were off 0.1%.

Elsewhere, the U.N. climate conference in Scotland managed to hammer out a deal on emissions, but only by watering down a commitment to phase out coal.

Wall Street eased last week to break a string of gains, though the major indices were only a shade off all-time highs.

A key release this week will be U.S. retail sales on Tuesday for any impact from the drop in consumer sentiment to a decade low reported for November as people fretted over higher prices, particularly for petrol.

There are also doubts about whether firms have the pricing power to maintain margins in the face of rising costs.

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Analysts at BofA noted 75% of U.S. companies had beaten earnings estimates in the latest reporting season but forecasts for the fourth quarter were only flat, breaking more than a year of rising expectations.

The grim survey helped Treasuries steady a little, but yields were still up a hefty 11 basis points for the week as the market priced in a greater risk of an early tightening by the Federal Reserve.

BofA economist Ethan Harris suspects the market still has not priced in enough given the high starting level of inflation means rates need to rise more to reach neutral.

“If inflation stays high and comes in above the planned overshoot, the Fed will need to become much more hawkish and either accept a market correction or deliberately induce such a correction,” warns Harris.

Higher U.S. yields have combined with general risk aversion to benefit the dollar, which boasted its best week in almost three months. Against a basket of currencies, the dollar was firm at 95.017 and just off its highest since July 2020.

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It was holding at 113.85 yen, preparing for another challenge of the October top at 114.69.

The euro looked vulnerable at $1.1455, having broken decisively lower last week.

“COVID infection curves moving in the wrong direction are part of the reason, while renewed restrictions are being imposed in Austria and the Netherlands,” said Ray Attrill, head of FX strategy at NAB.

“The implications or both growth and ECB policy are not being lost on currency markets.”

European Central Bank President Christine Lagarde will appear before European Parliament later on Monday.

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Inflation concerns kept gold in demand at $1,857 an ounce, after notching its biggest weekly gain since May.[GOL/]

Oil prices had a tougher week, hit by a strengthening dollar and speculation that President Joe Biden’s administration might release oil from the U.S. Strategic Petroleum Reserve.[O/R]

Brent reversed early gains on Monday to lose another 75 cents to $81.42 a barrel, while U.S. crude fell 68 cents to $80.11.

(Reporting by Wayne Cole; Editing by Sam Holmes)

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Alibaba overhauls e-commerce businesses, appoints new CFO

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December 6, 2021

(Reuters) -Alibaba Group Holding Ltd said on Monday it was reorganising its international and domestic e-commerce businesses and would appoint a new chief financial officer.

The changes come as Alibaba faces headwinds on multiple fronts, including increased competition, a slowing economy and a regulatory crackdown.

The e-commerce giant’s Hong Kong-listed shares slid 8% in early morning trade.

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Alibaba said it would form two new units to house its main e-commerce businesses – international digital commerce and China digital commerce, in a bid to become more agile and accelerate growth.

The international digital commerce unit will house Alibaba’s overseas consumer-facing and wholesale businesses, and include AliExpress, Alibaba.com and Lazada. The unit will be headed by Jiang Fan, whose past roles include president of the Taobao and Tmall marketplaces.

Alibaba will house its domestic commerce businesses in the China digital commerce unit which be led by Trudy Dai, a founding member of Alibaba, it said.

The company’s deputy chief financial officer, Toby Xu, will succeed Maggie Wu as the company’s chief financial officer from April, it said, describing his appointment as part of the company’s leadership succession plan.

Xu joined Alibaba from PWC three years ago and was appointed deputy CFO in July 2019.

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Wu, who helped lead three Alibaba-related company public listings as CFO, will continue to serve as an executive director on Alibaba’s board.

Last month the company slashed its forecast for annual revenue growth to its slowest pace since its 2014 stock market debut and saw sales at its banner event, online shopping festival Singles Day, grow at their slowest rate ever.

(Reporting by Akriti Sharma in Bengaluru and Brenda Goh in Shanghai; Editing by Edwina Gibbs)

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China Evergrande shares hit 11-year low after firm says no guarantee it can meet repayments

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December 6, 2021

By Clare Jim

HONG KONG (Reuters) – Shares of China Evergrande Group tumbled 12% to an 11-year low on Monday after the firm said there was no guarantee it would have enough funds to meet debt repayments, prompting Chinese authorities to summon its chairman.

The shares fell as a 30-day grace period on a coupon payment of $82.5 million due on Nov. 6 comes to an end on Monday.

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Evergrande, once China’s top-selling developer, is grappling with more than $300 billion in liabilities. A collapse could send shockwaves through the country’s property sector and beyond.

In a filing late on Friday, Evergrande, the world’s most indebted developer, also said it had received a demand from creditors to pay about $260 million.

That prompted the government of Guangdong province, where the company is based, to summon Evergrande Chairman Hui Ka Yan, and it later said in a statement it would send a working group to the developer at Evergrande’s request to oversee risk management, strengthen internal controls and maintain normal operations.

In a series of apparently coordinated statements late in the evening, China’s central bank, banking and insurance regulator and its securities regulator sought to reassure the market that any risks to the broader property sector could be contained.

Short-term risks caused by a single real estate firm will not undermine market fundraising in the medium and long term, the People’s Bank of China said, adding that housing sales, land purchases and financing “have already returned to normal in China”.

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Evergraned’s stock fell more than 12% to HK$1.98, its lowest since May 2010.

(Reporting by Clare Jim; Editing by Anne Marie Roantree and Christopher Cushing)

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Oil gains more than $1/bbl after Saudi price hike

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December 6, 2021

By Florence Tan

SINGAPORE (Reuters) – Oil prices rose by more than $1 a barrel on Monday after top exporter Saudi Arabia raised prices for its crude sold to Asia and the United States, and as indirect U.S.-Iran talks on reviving a nuclear deal appeared to hit an impasse.

Brent crude futures for February gained $1.69, or 2.4%, to $71.57 a barrel by 0033 GMT while U.S. West Texas Intermediate crude for January were at $67.92 a barrel, up $1.66, or 2.5%.

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On Sunday, Saudi Arabia raised January official selling prices for all crude grades sold to Asia and the United States by up to 80 cents from the previous month.

The price hikes were implemented despite a decision last week by the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, to continue increasing supplies by 400,000 barrels per day in January.

Prices were also buoyed by diminishing prospects of a rise in Iranian oil exports after indirect U.S.-Iranian talks on saving the 2015 Iran nuclear deal broke off last week. European officials voiced dismay on Friday at sweeping demands by Iran’s new, hardline government. The talks are expected to resume middle of this week.

Both benchmarks rebounded after falling last week for their sixth week in a row for the first time since November 2018 on concerns that the new coronavirus variant Omicron could impact global economic growth and fuel demand.

In another sign of the turmoil unleashed by the ever-changing pandemic, the head of International Monetary Fund said the global lender is likely to lower its global economic growth estimates because of the new variant.

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Omicron has spread to about one-third of U.S. states as of Sunday.

(Reporting by Florence Tan; Editing by Stephen Coates)

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