Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei +0.19%, Hang Seng (0.01%), Shanghai Composite (0.59%) as of 04:10 ET

Aug 07 ,2023

• Synopsis:

  • Asian equities ended mixed Monday in a quiet day's trading. Japan reversed early losses to close slightly higher. Australia closed lower. Hong Kong was flat while mainland markets fell on steep falls in healthcare stocks. Taiex gained, Kospi lower. Small gain in India, most of Southeast Asia nudged higher ex Thailand that slipped again. US futures higher, Europe seeing a tepid open. US dollar reversing some of Friday's losses, yen and yuan notably weaker. Treasury yields higher at the short end / lower at the long, JGB yields lower across tenors. Crude oil lower after reaching four-month high, precious and industrial metals down including more declines in iron ore.

  • Asia markets struggled for a firm direction Monday as Japan gapped down only to recover as US futures turned positive but other markets continued to drift. The Hang Seng and CSI 300 indices were dragged lower by healthcare and biotech stocks as regulators widened an anti-graft crackdown, offsetting gains in oil-based stocks. A weak handover from Wall Street contributed to the generally weak sentiment for equities as NFP miss and Fitch's rating downgrade weighed on US stocks Friday however regional focus still on the bond market where BOJ stepped up JGB buying via unscheduled purchase operations in a bid to cap the rise in yields.

  • The BOJ summary of opinions today hinted that one member saw the bank's 2% target rate in sight while the recent tweak was made to ensure the smooth operation of policy, highlighting a growing dichotomy of views inside the BOJ. China authorities raised its emergency response level in response to northeastern floods as natural disaster costs threaten to further weigh on economic growth, South Korea latest to warn on potential floods as Thyphoon Khanun approaches. Saudi Arabia raised oil selling prices to Asia though magnitude of increase was less than expected. Australian job advertisements steadied though overall trend points to some labor market loosening.

  • Hua Hong Semiconductor (1347.HK) debuted on Hong Kong exchange Monday but saw its share price fall around 7% at the open. China Traditional Chinese Medicine (570.HK) and Livzon Pharmaceutical (1513.HK) among the stock fallers following reports Beijing was widening its probe into graft in the pharma sector. Foxconn (Hon Hai 2317.TT) forecast a rebound in sales in Q3 even as sales for July fell 1% y/y. Bain Capital is to pay A$838M ($551.3M) for Estia Health (EHE.AU), more than 25% premium to its closing share price Friday. The Australian regulator has blocked ANZ's (ANZ.AU) A4.9B ($3.2B) takeover of Suncorp (SUN.AU) to set the scene for a likely legal battle.

• Digest:

  • BOJ Summary of Opinions note YCC tweak was to ensure smooth operation of monetary easing:

    • BOJ Summary of Opinions for July meeting based YCC tweak on need to ensure smooth operation of monetary easing for as long as necessary. Argued continuing to strictly cap 10Y ceiling at 0.5% could affect functioning of bonds market. Stressed importance of letting markets determine rates as much as possible while preventing sharp fluctuations. Maintained need to continue monetary easing in order to achieve 2% inflation target in a sustainable and stable manner. Added there is still long way to go before revising negative rate policy. Forecast inflation likely falling below 2% in H2 of fiscal 2023, and that for inflation stay at 2% in a stable manner required wage growth surpassing rate agreed to recent spring wage negotiations. Also noted possibility of inflation deviating upward from baseline scenario if pass-through of cost increases becomes widespread against backdrop of wage hikes.

  • Rise in JGB yields has failed stem yen's depreciation:

    • JGB yield curve has steepened noticeably in the wake of BOJ's policy tweak in late July. JGB 10Y has risen 17 bp since then, recently hitting a nine-year high. At the same time, yen has come under some pressure, falling to its lowest against the dollar since early July as Treasury yields rose alongside JGB rates (Nikkei). Treasury curve has steepened noticeably amid a pickup in US soft landing and peak Fed expectations, leaving US-Japan 10Y spread little changed. Additionally, BOJ has become more active in JGB market, making two unscheduled purchase operations last week in a bid slow rise in yields. While BOJ has offered to buy 10Y debt at a yield of 1% as part of its policy program, economists harbor doubts BOJ will allow 10Y yield to rise that high. Moreover, consensus expectation appears to have settled on no further policy changes in 2023.

  • China healthcare and biotech stocks plunge as graft crackdown widens:

    • Shanghai and Hong Kong healthcare and biotech stocks fell sharply Monday on reports Beijing's crackdown on graft in sector had widened with as many as 155 healthcare officials now under investigation, twice number in 2022 (Bloomberg). Crackdown controlled by national health and medical commission alongside nine other agencies including ministry of public security and state administration for market regulation was flagged last month as Beijing attempts to root out corruption in sector. However, reports Monday suggest probe is deeper than initially expected. Among stocks to see substantial falls, China Traditional Chinese Medicine (570.HK) and Livzon Pharmaceutical (1513.HK) both down around 13%; CSI 300 Healthcare Index down around 3.2%. Crackdown said to be targeting corruption, unfair business practices. STCN reported CNY150B worth in market capitalization has been wiped out in pharma and biotech A-Shares since 31-Jul.

  • Global funds chase Japan stocks as sentiment toward China remains fragile:

    • Bloomberg citing Goldman Sachs data reported foreign buying of Japanese stocks has exceeded that of Chinese peers during H1 for first time since 2017. Morgan Stanley said long-only managers continued to be net sellers of Greater China stocks in July despite rally while buying shares in Japan. Optimism remains high even after BOJ policy tweak as strategists see it as removing an overhang and providing clarity (Bloomberg) while lack of confidence among investors toward China stocks despite pledges to shore up economy. MSCI gauge of Japan stocks has risen 21% YTD buoyed by corporate governance reforms and Warren Buffett endorsement. Japan also benefited from geopolitical tension through supply chain diversification, meanwhile MSCI China index up 0.5% in comparison. Reuters noted US congressional probe of BlackRock and MSCI for facilitating American investment in Chinese companies tied to its human rights abuses or military could presage broader clampdown on US institutional investment in such shares.

  • Indonesia Q2 GDP grows at the fastest pace in three quarters:

    • Indonesia's statistics agency said Q2 GDP grew 5.17% y/y versus consensus 4.9% and Q1's 5.1%, fastest pace in three quarters. On q/q basis, GDP rose 3.86% versus consensus 3.72%. Strong household and government spending offset weakening exports and falling commodity prices; transport and storage grew most at 15.3%, country's biggest island Java grew 15.6%. Analysts expected growth to cool this year following commodities-driven boom last year while monetary policy tightening of 225 bps also expected to hurt demand. However, household consumption grew 5.23% y/y on rising spending ahead of Ramadan and Eid during quarter. Government spending growth more than doubled to 10.62%, investment rose to 4.63% y/y. On negative side, exports fell 2.75% y/y from 10% growth in same period last year. Government maintains FY growth 5.3% to match FY 2022 level, Bank Indonesia kept 4.5-5.3% growth target (Reuters).

  • Notable Gainers:

    • +10% 4503.JP (Astellas Pharma): FDA approves IZERVAY to treat geographic atrophy (GA)

    • +8.4% 8113.JP (Unicharm): reports H1 revenue ¥453.94B, +8% vs year-ago ¥421.61B, core operating income ¥58.75B, +6% vs year-ago ¥55.42B

    • +4.4% 071050.KS (Korea Investment Holdings Co.): reports Q2 operating profit KRW255.66B vs FactSet KRW226.50B

    • +4.1% 030200.KS (KT): confirms Kim Young-shub as CEO; Kim will be officially inaugurated after approval at EGM at end of August

    • +1.4% 9434.JP (SoftBank Corp): reports Q1 revenue ¥1.430T vs StreetAccount ¥1.439T, operating income ¥246.32B vs StreetAccount ¥234.80B

  • Notable Decliners:

    • -12.6% 9684.JP (Square Enix Holdings): reports Q1 revenue ¥85.67B vs FactSet ¥89.34B, operating income ¥3.10B vs FactSet

    • -10.4% 022100.KS (POSCO DX Co.): Hyundai Motor reportedly asks its suppliers to cut production for EV parts

    • -3.9% 604.HK (Shenzhen Investment): guides H1 net income attributable at least (HK$200M) vs year-ago HK$2.36B

• Data:

  • Economic:

    • No economic data today

  • Markets:

    • Nikkei: 61.81 or +0.19% to 32254.56

    • Hang Seng: (1.54) or (0.01%) to 19537.92

    • Shanghai Composite: (19.25) or (0.59%) to 3268.83

    • Shenzhen Composite: (13.77) or (0.66%) to 2057.82

    • ASX200: (16.10) or (0.22%) to 7309.20

    • KOSPI: (22.09) or (0.85%) to 2580.71

    • SENSEX: 279.53 or +0.43% to 66000.78

  • Currencies:

    • $-¥: +0.41 or +0.29% to 142.1420

    • $-KRW: (0.19) or (0.01%) to 1304.0000

    • A$-$: +0.00 or +0.02% to 0.6573

    • $-INR: +0.03 or +0.04% to 82.7300

    • $-CNY: +0.02 or +0.29% to 7.1914