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StreetAccount Summary - Asian Market Recap: Nikkei +1.77%, Hang Seng +1.27%, Shanghai Composite +0.31% as of 03:10 ET

Jan 11 ,2024

• Synopsis:

  • Asia equities traded higher almost everywhere Thursday as risk-on sentiment returned. Nikkei closed above 35K for the first time since Feb-90 following a second consecutive strong day. Hang Seng led elsewhere, mainland China markets were also higher. Australia, Taiwan higher, Southeast Asia higher ex Thailand, India seeing modest gains. South Korea down for a seventh consecutive day as SEC dragged. US futures higher, European markets opened higher. US dollar a little weaker, Asia currencies stronger including the won. Treasury yields higher at the short end, lower at the long; China 10Y sovereign yield at almost 22-year low. Crude oil, precious and industrial metals all caught a bid. Cryptocurrencies slightly lower.

  • Asia stocks saw a risk-on day as sentiment improved in China after several brokers began to talk of cheap valuations and that the bad news in the property sector was largely priced in. Technical oversold positions may also have played a role. South Korea saw another fall as the BOK kept rates on hold, as expected, but shifted to a more neutral stance after it removed references to potential rate hikes. Japan equities higher as the yen's recent weakness combined with foreign inflows and domestic buying connected to the tax-free retirement scheme, to send benchmarks to decade-long highs. Yen's weakness slightly dented today but is still 3.0% weaker YTD with analysts saying the BOJ has little incentive to raise rates soon, if at all; consensus still sees April as the likely launch date.

  • Australia trade surplus came in higher than expected though read-throughs limited. Ahead, US CPI, broadly cited for restraining risk appetite this week along with onset of earnings reporting season Friday; China credit data slated for release in coming days; China inflation and trade data Friday to cap off key regional data releases this week.

  • Sino-Ocean Group (3377.HK) has told some bondholders it plans to extend all of its yuan bonds, pushing back maturities in four notes by up to 30 months. KT Corp (030200.KS) is considering selling its securities business and has been speaking with EQT Partners. A tax department probe found unaccounted for sales at Polycab India (542652.IN) worth INR10B ($120.5M). Samsung Electronics (005930.KS) heirs have sold shares in the group as well as in several other Samsung Group companies in order to pay inheritance tax.

• Digest:

  • Bank of Korea holds rates steady, sees little chance of cut in next six months::

    • Bank of Korea held base 7D repo rate steady at 3.5% for eighth consecutive meeting Thursday, as widely expected. Accompanying statement removed phrase 'to judge need to raise base rate further' while Governor Rhee added MPC members saw no rate cuts for next three months, little chance of cuts for next six months. Said China economy poses risks to BOK forecasts. Decision comes amid persistently high inflation and warnings from Governor Rhee that bank will concentrate on achieving stable inflation. December headline inflation fell to 3.2% but still above BOK's 2.0% target, meanwhile economic recovery continues to stutter despite upswing in semiconductor exports as consumer sector remains weak due to persistent inflation and high interest rates, high household debt, creeping unemployment. Collapse of Taeyoung E&C also likely to be top of mind with MPC. Focus now on press event later Thursday (Yonhap).

  • BOJ regional economic assessment mostly stable, still uncertainties surrounding wage outlook:

    • BOJ's Regional Economic Report for January showed six out of nine regions maintained their economic assessment from October. Two others were upgraded with one downgrade. Key focus on wage developments after Governor Ueda mentioned this report would be one of the few sources of new information ahead of the January MPM. Many regions reported stronger sense of tighter labor markets and staff shortages. On this year's wage hikes, noted that after some large firms have already announced base pay equal to or higher than last year, momentum building somewhat earlier than usual in rural areas despite some variation depending on the region. However, many firms have yet to set wages because they want to observe activity among competitors. Caution due to earnings constraints was not uncommon. Many responses indicated a high level of uncertainty on the breadth and magnitude of wage hikes. On corporate price-setting behavior, most responses indicated a slower pace of cost passthrough. Some indications of deferred price hikes or cuts to some products in response to cost-conscious consumer spending. Still, growing payroll costs prompting some companies to either implement or consider price hikes.

  • Australia trade surplus larger than expected:

    • Trade balance was A$11.437B in November, above consensus A$7.3B and follows revised A$7.66B in the previous month. Main factor was a sharp 7.9% m/m drop in imports, following revised 2.9% decline in the prior month. Biggest drag came from a 14.0% drop in consumption goods and ABS highlighted a 26.0% fall in non-industrial transport equipment, which led declines in other consumption good categories, as well as capital and intermediate goods. Exports rose 1.7%, extending revised 0.8% growth in October. Mostly driven by non-rural goods, particularly coal, coke & briquettes. Metal ores & minerals also increased, though metals excluding non-monetary gold fell. Rural exports saw broad growth in meat, cereal grains and wool. Press takeaways were benign. Bloomberg noted China/Asia demand for resources underpinning exports, leading to consistent trade surpluses, contributing to a return to budget surplus for the first time in 15 years. Recent attention has been on delays in import throughput amid ongoing port strikes and disruptions caused by Red Sea terrorist attacks (SMH).

  • Washington warns Beijing over interference in Taiwan elections:

    • A senior White House official has warned Beijing not to interfere or attempt to influence this weekend's presidential and parliamentary elections in Taiwan (Reuters). Just days before poll, Beijing threatened fresh trade measures against Taiwan in non-tech sectors, cast election as choice between war and peace while saying interference allegations were 'dirty tricks' by ruling DPP to win support (Reuters). Report in Taipei Times cited Taiwanese national security official saying China behind mass-posting of disparaging fake videos of incumbent President Tsai. War of words ramped up markedly this week ahead of polls with frontrunner Lai Chin-te saying he would maintain status quo with China despite China's alleged interference being "the most serious yet" while Beijing continues to label him as separatist. Chinese balloons and satellite launch over Taiwan in recent days added to cross-strait tensions (FocusTaiwan).

  • Foreign investors return to Japan equities:

    • Nikkei discussed Japan market tailwinds from foreign inflows and corporate drive to improve capital efficiency. Highlighted TSE data showing foreign investors bought net JPY3.122T ($214.4B) in Japan equities in 2023, turning net buyers for the first time in two years. Noted that buying topped JPY8T when including share buybacks, lifting Nikkei 225 to 33-year highs. With meaningful shifts away from a market reliant on BOJ support, attention turns to retail investment trends. Article credited TSE drive to improve PBRs as a factor prompting renewed overseas interest. Recalled that while foreigners were initially bullish after the launch of Abenomics policies, disappointment over deregulation and corporate profitability caused a reversal. Such outflows were essentially absorbed by BOJ ETF purchases, accumulating to over JPY35T since 2013. While this provided support over the pandemic, some companies have complained about public institutions becoming major stakeholders. However, data also showed individual investors sold net JPY2.919T last year. Some thoughts that prior selling reflected unwinding of positions taken during bubble-era, though this has turned around. Hopes turn to expanded NISA program to encourage more activity.

  • Notable Gainers:

    • +8.9% 2269.HK (Wuxi Biologics (Cayman)): provides further business update; reports record high of 132 new projects; announces research service agreement with BioNTech

    • +1.2% 8630.JP (Sompo): reports Sompo Japan Insurance December sales ¥219.46B, +2.0% y/y

    • +1.2% 8267.JP (AEON Co.): reports December same-store sales; AEON Retail same-store sales +0.3% y/y

    • +0.8% 7832.JP (BANDAI NAMCO Holdings): to transfer its entire 30.6% stake in Italian Tomato Co. to Key Coffee; terms undisclosed

  • Notable Decliners:

    • -3.2% 018260.KS (SAMSUNG SDS CO.): deceased Samsung Group chairman Lee Kun-hee's wife, daughters reportedly looking to sell some Samsung Electronics shares as well as KRW558.6B of shares in Samsung Life Insurance, Samsung SDS, and Samsung C&T

    • -2.9% 2408.TT (Nanya Technology): reports Q4 EPS (NT$0.80) vs FactSet (NT$0.61), revenue NT$8.70B vs FactSet NT$8.88B

    • -2.7% 600161.CH (Beijing Tiantan Biological Products): reports preliminary FY net income attributable CNY1.10B vs FactSet CNY1.15B

    • -1.0% 033780.KS (KT&G Corp): president Baek Bok-In reportedly intends to retire

    • -0.7% 030200.KS (KT): reportedly looking at selling KT Telecop

• Data:

  • Economic:

    • Japan November

      • Leading economic index 107.7 vs revised 108.9 in prior month

        • Coincident index 114.5 vs 115.9 in prior month

    • Australia November

      • Trade balance A$11.437B vs consensus A$7.3B and revised A$7.66B in prior month

        • Exports +1.7% m/m vs revised +0.8% in prior month

        • Imports (7.9%) m/m vs revised (2.9%) in prior month

  • Markets:

    • Nikkei: 608.14 or +1.77% to 35049.86

    • Hang Seng: 204.76 or +1.27% to 16302.04

    • Shanghai Composite: 8.95 or +0.31% to 2886.65

    • Shenzhen Composite: 28.03 or +1.62% to 1760.77

    • ASX200: 37.50 or +0.50% to 7506.00

    • KOSPI: (1.71) or (0.07%) to 2540.27

    • SENSEX: 98.97 or +0.14% to 71756.68

  • Currencies:

    • $-¥: (0.35) or (0.24%) to 145.4050

    • $-KRW: (6.11) or (0.46%) to 1313.4300

    • A$-$: +0.00 or +0.23% to 0.6716

    • $-INR: +0.00 or +0.01% to 83.0212

    • $-CNY: (0.01) or (0.15%) to 7.1611