Hong Kong stocks fall about 2% to lowest level this year; Bank of Korea holds rates

Hong Kong's Hang Seng Index led losses in Asia in Thursday, falling more than 2% to its lowest level in about six months.

The HSI was at 18,643.59 points on Thursday, just above the closing value of 18,597.23 on Nov 30, 2022.

Healthcare and industrial stocks led losses on the index on Thursday, with names like logistics company Orient Overseas, apparel company Li Ning and Internet giant JD.com among the largest losers.

— Lim Hui Jie

Singtel shares fell more than 1% Thursday after the company posted a 14% rise in net profit to S$2.23 billion ($1.65 billion) for the year ending March 2023 from the year before.

The company proposed a final ordinary dividend per share of 5.3 cents, for a total ordinary dividends of 9.9 cents per share, representing an 80% payout of underlying net profit.

Total aggregate dividends for the year totaled 14.9 cents per share.

SingTel Group chief executive Yuen Kuan Moon told CNBC in an interview that the company saw robust mobile growth and price uplifts as international travel and roaming recovered.

— Clement Tan

Shares of Chinese EV maker Xpeng tumbled almost 8% on Thursday, mirroring losses in its U.S. listed stock. Its U.S. shares were down more than 11% shortly after the U.S. opening bell.

This comes after the company after the company reported first quarter earnings that missed expectations and forecast a plunge in car sales.

First quarter Revenue halved and came in at 4.03 billion Chinese yuan ($571.6 million), versus expectations of 5.19 billion yuan. Xpeng's net loss also stood at 2.34 billion billion yuan, more than the versus 1.9 billion expected and wider than the 1.7 billion yuan loss reported in the first quarter in 2022.

Xpeng forecast deliveries of its vehicles to be between 21,000 and 22,000 in the second quarter, representing a year-over-year decrease of between 36.1% to 39%.

— Lim Hui Jie, Arjun Kharpal

Reserve Bank of New Zealand's governor Adrian Orr said the current interest rate of 5.5% will be "sufficiently restrictive" to bring down the country's inflation to its target of 1-3%.

The central bank on Wednesday raised its benchmark interest rate by 25 basis points to 5.5% while indicating that rates will be on hold at the current rate.

Reuters added that the central bank signaled that the RBNZ's rate hikes are done with its hiking cycle.

Orr told CNBC's "Squawk Box Asia," explained that "central banks will never say [they're] done."

"What we're saying is our projection ahead is for a very flat 5.50% Official Cash Rate for the foreseeable future. But we retain options," Orr said.

He said that New Zealand's inflation expectations and economic growth is slowing, and "that gives us confidence that we can watch worry and wait, hopefully, and achieve our inflation target."

Despite the country's inflation rate standing at 6.7% in March, Orr predicts that inflation will reach 3% by the middle of 2024, and then to 2% by the middle of 2025.

"From now on, we hope to see headline CPI inflation to continue to fall and the economy achieve a relatively soft landing, although it probably won't feel like that for most people, because we like to spend," he quips.

— Lim Hui Jie

The Bank of Korea held its benchmark interest rate for the third consecutive time at 3.50% on Thursday.

The decision was in line with a consensus forecast by economists surveyed by Reuters that expected the central bank to pause.

The central bank governor earlier this month told CNBC that it was 'premature' to be discussing a rate cut, citing inflation rates in the nation that are still above the Bank of Korea's target of 2%.

South Korea is slated to release its consumer price index for May next Friday.

— Jihye Lee

The Bank of Korea is expected to start cutting its benchmark interest rate early next year, Deutsche Bank's head of APAC Economic Research Juliana Lee said.

Lee added that she expects the central bank's policy pivot to come in tandem with the U.S. Federal Reserve.

"There are some signs that it's (exports) have hit the bottom in terms of contraction, but in terms of the rebound, we're not expecting until the fourth quarter, hence why we have a more bearish view" for growth than the central bank, Lee told CNBC's "Squawk Box Asia."

Lee added that she expects the South Korean won to remain widely unchanged until the central bank starts cutting rates.

— Jihye Lee

Indonesia's central bank is expected to hold its 7-day reverse repo rate at 5.75%, according to economists polled by Reuters.

The economists also forecast the central bank to hold its deposit facility rate at 5.00% and its lending facility rate at 6.50% as well.

The move would mark a third consecutive pause for Bank Indonesia, as the nation marked an inflation rate of more than 4% in April. The nation releases its inflation rate for May next month.

— Jihye Lee

South Korea's producer price index rose 1.6% year on year in April, lower than the 3.3% rise seen in the previous month.

Government data showed that month-on-month, the nation's producer price index fell by 0.1% after seeing growth of 0.1% in March.

The PPI is a measure of the change in prices that domestic producers receive for their goods and services.

The South Korean won weakened 0.11% in Thursday's morning to 1,319.66 against the U.S. dollar.

— Jihye Lee

The Fed minutes showed "uncertainty" from participants about whether to increase rates for an 11th time at its June meeting.

There appeared to be two camps in the Fed now, according to the minutes. One group that contained "some" members judged that progress in reducing inflation was "unacceptably slow" and would necessitate further hikes. The other, backed by "several" FOMC members, saw slowing economic growth in which "further policy firming after this meeting may not be necessary."

The minutes do not identify individual members nor do they quantify "some" or "several" with specific numbers. However, in Fed parlance, "some" is thought to be more than "several."

Bottom line, the minutes showed the Fed would be closely watching the incoming data to decide whether to hike rates again on June 14.

— Jeff Cox, John Melloy

Correction: In Fed parlance, "some" is thought to be more than "several." An earlier version misstated the difference.

Addressing a three-pronged question facing U.S. central bankers, Federal Reserve Governor Christopher Waller said it's just too soon to tell which choice is correct. Data in the coming weeks before the June 13-14 meeting will determine which is the proper path, he said.

While Waller insisted the Fed will need to "maintain flexibility" on whether it should hike, pause or skip June with an inclination to increase rates in July, he did express doubt that the Fed has gone as far as it needs in the fight against inflation.

"I do not expect the data coming in over the next couple of months will make it clear that we have reached the terminal rate," Waller said in prepared remarks for a speech in Santa Barbara, Calif.

"And I do not support stopping rate hikes unless we get clear evidence that inflation is moving down towards our 2% objective. But whether we should hike or skip at the June meeting will depend on how the data come in over the next three weeks," he added.

— Jeff Cox

House Speaker Kevin McCarthy reiterated that negotiators should reach a resolution on the debt ceiling even as lawmakers struggle to agree on baseline spending.

"We're not going to default," he said during a press conference Wednesday. "We're going to solve this problem. I will stay with it until we can get it done. But let's be honest about this. We had to spend less than we spent last year. It is not my fault that the Democrats cannot give up on their spending."

— Samantha Subin, Sarah Min

Negotiators for both sides of the debt ceiling talks were expected to meet again on Wednesday morning, Reuters reported, citing a source familiar.

Stocks fell on Tuesday after negotiators for President Joe Biden and House Speaker Kevin McCarthy appeared to not make significant progress in talks that day.

It could take a week to write any deal and pass it through Congress, the Reuters report stated, raising the stakes to reach an agreement in the next couple days ahead of a June 1 deadline for default from the Treasury.

— John Melloy