Global Courant
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The Nikkei index opened during the first hour of trading on Thursday with a decline of 1.2 percent. The decline has continued and amounts to more than 1.7 percent after morning trading.
Several of the largest and most important Asian stock exchanges will go into hibernation over the next ten days. The Chinese stock exchanges are completely closed from Friday to Monday, October 9.
China Evergrande Group, which has fallen more than 98 percent from its peak when it was the world’s most valuable real estate company, asked on Thursday morning to be suspended from trading on the Hong Kong stock exchange. No justification has been given. The share price has fallen by more than 40 percent in a week.
Bloomberg reported on Wednesday that chairman Xu Jiayin has been placed under supervised house arrest. The business newspaper Caixin wrote earlier this week that two former directors have been arrested. None of this has been confirmed by the company or Chinese authorities.
Short-term setback
The next ten days will be very important for the Chinese economy. The National Day and Autumn Festival celebrations are traditionally a period when Chinese people buy new homes and spend money on travel, luxury and comfort. It is expected that 800 million trips will be made during ‘Golden Week’.
The article continues below the advertisement– The project developers hope to reverse the decline in home sales. While demand remains weak amid the wave of negative news, the traditionally busy period could drive a short-term recovery for stocks, SMBC Nikko Securities analyst Jeremy Yeo said in a commentary.
This is the first time since the pandemic that Chinese people have been able to move within China and abroad without restrictions.
– There has been a significant increase in domestic airline ticket sales compared to the same period in 2019, Civil Aviation Administration of China Director Jin Junhao, referring to the normal year before the pandemic, told the South China Morning Post.
According to trip.com, flights from China to Southeast Asia, Australia and Europe are full.
Thailand, where almost a third of all tourists came from China in 2019, this week dropped the requirement for tourist visas for Chinese nationals on a trial basis until February next year. The Prime Minister was present at the main airport with gifts and offers for selfies as the first planes landed.
– We are convinced that this will give the economy a significant boost. We are marketing smaller tourist destinations to Chinese tourists, encouraging them to stay longer and spend more money, Prime Minister Srettha Thavisin said.
Downgrade luxury
French luxury brand company LVMH Moet Hennessy Louis Vuitton has fallen 22 percent since July. Christian Dior and Hermes International follow closely behind with a decline in share prices and market value of approximately 20 percent. Dutch technology company ASML and Siemens have fallen almost as much.
The article continues below the advertisementThe common denominator is that these are companies that are dependent on the Chinese market. They’ve spent decades building a presence. The demand for expensive bags from Louis Vuitton and Hermes is disappointing in China.
– The luxury goods sector has undergone a sharp downward adjustment over the past month. We believe this reflects deteriorating macro indicators from China and the transition to more normal growth, a team of Barclays analysts, led by Carole Madjo, wrote after a trip to China in September.
Barclays lowered the price target for LVMH by more than ten percent.
– Since LVMH is a representative of the entire sector, we have also lowered the outlook for the sector from positive to neutral, the analysts write in a report acquired by Fashion Network.
– Strengthens anxiety
The market value of the world’s publicly traded companies fell below $100 trillion on Tuesday, according to Factset. Share prices have fallen by seven percent in the past two months. The combination of weak activity in China, high interest rates, geopolitical conflicts and lower international trade is behind this.
– The global rise in interest rates has led to higher capital costs for companies, raising fears that they will revise their investment plans, global market strategist Tomo Kinoshita of Invesco Asset Management told Japanese business newspaper Nikkei.
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Taiwan Semiconductor Manufacturing Co., the world’s largest contract manufacturer of computer chips, has asked subcontractors to delay deliveries of new production equipment.
Not everything is dark. Japanese industrial companies and exporters are active, partly thanks to a very weak currency. International pharmaceutical companies are on the rise, led by Eli Lilly, Amgen and Denmark’s Novo Nordisk, which has become Europe’s most valuable listed company.
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Problems with China are causing global stock markets to fall – hope for a near-term recovery
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