Asian Stocks Mixed, Fed Cuts Interest Rate

Asian stocks became unstable during the morning trade on Thursday. And this came after the U.S. Federal Reserve had another interest rate cut for the second time in two meetings.

China’s Shanghai Composite, Shenzhen Component, Japan’s Nikkei, and South Korea’s Kospi all went higher from 0.1% to 0.3%. On the other hand, Hong Kong’s Hang Seng index fell by 1.2%.

Then, moving away from Asian stocks, Australia’s ASX gained as much as 0.5%. Also, its employment went up to 24.7k in August, beating the expectation of 10k. However, the unemployment rate increased by 0.1% to 5.3%, matching the expectations.

Meanwhile, part of the changes in Asian stocks, the Fed cut its key federal funds rate to the 1.75% to 2% range from the previous 2% to 2.25%. For this year, this will be the second rate cut that was also widely seen by analysts before.

However, President Donald Trump thinks that the Fed failed and has not done enough cut in interest rates. In a tweet, he talked about his concerns that the ongoing trade war with China and slowing economic growth might further impact the U.S. economy.

SoftBank

Elsewhere, the founder of SoftBank Group Corporation, Masayoshi Son, pledged 38% of his stake in the Japanese firm. And this will serve as collateral for personal loans from 19 banks such as Credit Suisse Group and Julius Baer Group. Moreover, that was up from 36% from the start of the year and triple the level in June 2013.

Assistant professor Michael Puleo stated, “It lets him monetize a large share of his wealth without foregoing influence over the firm.” However, according to Puleo, there is an elevation of crash risk. And if the price declined low enough, he might get a margin call, which will be expensive.

Furthermore, the compensation of SoftBank has a lot of debt. Son even loaned himself about $3 billion to invest in the first Vision Fund.