Friday, 19 November 2021
Written by Royce Tan, Chief Market Insights Officer of GAX MD
> The Central Bank of the Republic of Turkey slashed interest rates for the third consecutive month, cutting its one-week repo rate by 100 basis points to 15%, at a time when central banks in other countries are contemplating the tightening of monetary policies. This sent the Turkish lira plunging to a record low, as much as 4.1% against the US dollar. It was a decision that surprised the markets, especially when the country’s consumer inflation almost hit 20% in October.
> Shares of companies listed in Hong Kong tanked on the last trading day of the week amid weak sentiments after China e-commerce giant Alibaba Group posted dismal earnings of only 3.4 billion yuan for its second quarter ended September 2021. This was a reduction of 87% year-on-year (y-o-y), far worse than analysts’ expectations. The company attributed this to its heavy investments in bargain marketplace Taobao Deals, community e-commerce store Taocaicai and Singapore-based e-commerce platform Lazada on top of a slowdown in growth of consumer spending. Group CEO Daniel Zhang Yong said Alibaba’s performance will reflect the overall market condition to some extent. Alibaba’s share price slipped 10.26% on Friday to HK$140.00.
> United States president Joe Biden is expected to announce the new chairmanship of the Federal Reserve (Fed) this weekend, which would see either Jerome Powell being renominated to the post or to be succeeded by Fed Governor Lael Brainard. Both of them have met Biden earlier this month and they are widely tipped to be the two leading candidates for the role. Should Brainard be appointed Fed chair, the market expects her to take on a looser monetary policy stance as compared to Powell, which could raise expectations of market inflation.
> The consumer price index (CPI) in the United Kingdom (UK) jumped to a 10-year high of 4,2% y-o-y in October, according to figures from the Office for National Statistics. It attributed the upward pressure to the rise in prices of electricity, gas and other fuels. Economists expect more pressure on the Bank of England to raise interest rates by at least 15 basis points in December.
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