Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei +0.61%, Hang Seng (1.39%), Shanghai Composite (1.48%) as of 03:10 ET

Jan 31 ,2024

• Synopsis:

  • Asia equities ended mixed once again Wednesday. Another day of losses for Hong Kong to close out a sixth consecutive monthly loss for the Hang Seng index; mainland markets fell to a five-year low post weak industrial output numbers. Japan closed higher to reverse a negative open, Australia ended at another record high. Losses in South Korea while Taiwan was lower on a TSMC correction. India higher, Southeast Asia mixed. US futures turning higher after being lower post Wall Street's close, Europe opened flat. US dollar higher and close to seven-week high, AUD weaker on steep inflation decline. Treasury yields mixed. Crude futures lower, precious and industrial metals flat.

  • China markets ended a dire month with more losses Wednesday after January factory activity shrank again, albeit at a slower pace from December. On the bright side, non-manufacturing rose to its highest since September. In the markets, with no end in sight to the country's economic malaise and piecemeal response from Beijing, the Hang Seng contracted for sixth consecutive month, with January being the worst in the current sequence, while mainland markets fell for the fifth month in six. Performance in contrast to more monthly gains in Japan which closed off January higher for a fourth month in a row.

  • In other macro developments, Australian Q4 inflation fell by more than expected and ended below RBA's year-end forecast, strengthening view cash rate has peaked. BOJ Summary of Opinions showed discussions on normalization path. Japan industrial production growth was below consensus and retail sales unexpectedly shrank. South Korean industrial production came in better than expected, Thailand industrial production fell 6.3% y/y, far more than forecast and November's reading. New Zealand business confidence highest since mid-2014. Philippine Q4-24 GDP better than expected.

  • Canon (7739.JP) says interest in its new chipmaking tools exceeded expectations as it looks to close the gap on rival ASML. Inpex (1605.JP) said it was to sell its stake in a Russian oil project to Itochu (8001.JP). Nippon Steel (5401.JP) said Japan's four megabanks plan a $16B loan for its acquisition of US Steel. Daihatsu (Toyota Motor, 7203.JP) said it had resumed production of another two vehicle models at its Kyoto plant but operations at two factories in Oita remain undecided. BYD (1211.HK) and NIO (9866.HK) among the EV stocks under pressure after US commerce secretary said there were real national security concerns over Chinese-made EVs. Samsung Electronics (005930.KS) posted its fourth consecutive quarter of profit decline on uneven chip demand recovery; revenue and operating losses also fell.

• Digest:

  • China official manufacturing PMI remains in contraction:

    • Official manufacturing PMI was 49.2 in January, matching expectations. Follows 49.0 in the previous month and marks the fourth straight month in contraction territory. Production growth accelerated while new orders and exports logged narrower declines. Inflation metrics softened with input price gains slowing as output prices fell at a faster pace. Employment and finished goods inventories extended declines to an 11th month. Large and medium-sized firms registered small improvements at the headline while small firms edged lower. Nonmanufacturing PMI was 50.7 vs consensus 50.6 and 50.4 in December, marking the highest since September. Main driver was services, edging into expansion for the first time since October, outweighing moderating growth in construction. NBS noted number of expanding service sectors swung to a narrow majority, supported by holiday effects and consumer propensity to spend, while business services and real estate remain weak. Softer construction attributed to the off-season ahead of Lunar New Year. Composite PMI improved to 50.9 from 50.3.

  • BOJ Summary of Opinions showed more forward-looking discussions on easing exit:

    • Summary of Opinions for the January meeting indicated increasing discussions on the normalization path amid growing confidence in the achievement of stable inflation conditions. One suggestion BOJ will likely determine whether to continue with its large-scale monetary easing measures, including NIRP once a virtuous wage/price cycle is confirmed achievement of inflation target comes in sight. Several comments indicating growing confidence in the prospects for achievement, particularly for bigger pay raises in this year's shunto talks. One member said it seems conditions for policy revision, including ending NIRP, are being met. Another noted BOJ has entered a phase where it needs to determine the likelihood of achieving target. One suggested they need to assess Noto Peninsula earthquake impacts over the next one or two months, then highly likely to reach a point where it can normalize monetary policy. Relatively dovish comment stressed price stability target not yet envisaged with sufficient certainty though still acknowledged the need to start discussing exit strategy with achievement of target becoming more realistic. One member proposed exit sequence should generally prioritize revisions to current policies with large side effects.

  • China's major cities further ease home-buying restrictions:

    • China's Shanghai and Suzhou (No. 6 in prefecture-level cities by GDP) relaxed home purchase restrictions, days after Guangzhou became first top-tier city to lift limits on houses with an area of over 120 square meters. Shanghai will now allow those who do not have a local household registration but have continuously paid social security or individual income tax for over five years to buy a house on city's outskirts while Suzhou has completely removed all restrictions, allowing residents to purchase as many houses as they can afford. Recall housing ministry said last week it would give cities full autonomy to adjust housing policies based on local market conditions (Yicai). Caixin noted ten major cities still have some sort of home-buying limits and more relaxation is expected although adjustments in top-tier cities would be more cautious. Doing away with limitations in top cities' outskirts with many having ample inventories is seen as more probable. Meanwhile Yicai reported so-called financing white list will target specific projects, instead of developers.

  • Asia failing to deliver anti-corruption measures, says Transparency International:

    • International anti-corruption NGO Transparency International said Asia made "little to no meaningful progress" towards curbing corruption with average score stagnating for fifth consecutive year at 45 out of possible 100. Said very few countries showed sustained turnarounds that would indicate significant changes in corruption levels, several nations with historically good scores slowly declining. Majority of Asian countries scored below global average (43), reflecting lack of delivery by elected officials of anti-corruption agendas, crackdowns on organized civil society; attacks on press freedoms, assembly and association. New Zealand highest ranking Asia country and third least corrupt globally but slowly declining; Singapore maintained fifth place globally; Australia maintained top 20, Hong Kong's score fell as basic freedoms restricted. North Korea and Myanmar toward bottom of index. Indonesia backslid on disempowering of anti-corruption agency, Thailand and Philippines remained at lower end of scale.

  • Australian inflation slows by more than expected, RBA rate cut forecasts brought forward:

    • Australian Q4 headline inflation slowed to 4.1% y/y from 5.4% in Q3, below consensus for 4.3% read. RBA's preferred trimmed mean inflation fell to 4.2% y/y from 5.2%, also below forecast for 4.3%. Both measures came in below RBA's year-end projection while separate monthly gauge showed December inflation slowed to 3.4% y/y from 4.3% in November. Fall driven largely by goods with furnishings and household equipment category experiencing outright deflation. Data indicated some easing of homegrown pricing pressures with non-tradables and services inflation both falling to lowest since Q2-2022. CPI adds to signs Australian economy lost momentum leading into year-end after separate data this month showed retail sales and employment contracted by more than expected last month, Futures now pricing in ~70% probability of RBA rate cut in June (vs 50% prior to data), and 100% chance of cut in August (Bloomberg).

  • Notable Gainers:

    • +15.2% 2127.JP (Nihon M&A Center Holdings): reports 9M revenue ¥31.15B, +4% vs year-ago ¥29.88, operating profit ¥11.23B vs year-ago ¥11.12B; to launch up-to-¥7.0B buyback, to run from 31-Jan through 31-Mar

    • +8.6% 6301.JP (Komatsu): Komatsu reports Q3 revenue ¥972.00B vs StreetAccount ¥935.68B, operating income ¥156.45B vs StreetAccount ¥144.95B

    • +7.9% 7751.JP (Canon): reports Q4; guides FY24 revenue ¥4.350T vs FactSet ¥4.345T, operating profit ¥435.00B vs FactSet ¥413.44B; to launch up to 33M-share buyback for up to ¥100B from 1-Feb to 31-Jan-25

    • +7.7% 300750.CH (Contemporary Amperex Technology): guides FY net income attributable CNY42.5-45.5B vs FactSet CNY43.92B

    • +1.8% 8795.JP (T&D Holdings): president Hirohisa Uehara reportedly to become chairman due to changes in management structure

  • Notable Decliners:

    • -15.7% 6770.JP (Alps Alpine Co.): reports Q3 net income attributable (¥27.0B) vs year-ago ¥3.6B

    • -13% 090430.KS (Amorepacific): reports full Q4 results, overseas sales KRW356.9B vs SA KRW443.81B

    • -111.7% 2382.HK (Sunny Optical Technology (Group)): analyst Ming-Chi Kuo comments on 2024 iPhone shipments

    • -7.3% 028050.KS (Samsung Engineering Co.): reports Q4 net income attributable KRW116.10B vs FactSet KRW146.96B; guides FY24 revenue KRW10.000T vs FactSet KRW10.401T

    • -2.3% 1211.HK (BYD Co. Ltd.): US Commerce Secretary says there are real national security concerns regarding Chinese EVs

    • -2.2% 005930.KS (Samsung Electronics): reports Q4 operating profit KRW2.825T vs guidance KRW2.80T and StreetAccount KRW3.611T

• Data:

  • Economic:

    • China January

      • Official manufacturing PMI 49.2 vs consensus 49.2 and 49.0 in prior month

        • Non-manufacturing PMI 50.7 vs consensus 50.6 and 50.4 in prior month

        • Composite PMI 50.9 vs 50.3 in prior month

    • Japan December

      • Retail sales (2.9%) m/m vs consensus +0.2% and +1.1% in prior month

        • Retail sales +2.1% y/y vs consensus +5.1% and +5.4% in prior month

      • Industrial production +1.8% m/m vs consensus +2.4% and (0.9%) in prior month

        • METI survey projections (6.2%) in January, +2.2% in February

    • Australia

      • Q4 headline CPI +0.6% q/q vs consensus +0.8% and +1.2% in Q3

        • Headline CPI +4.1% y/y vs consensus +4.3% and +5.4 in Q3

        • Trimmed mean CPI +0.8% q/q vs consensus +0.9% and +1.2% in Q3

          • Trimmed mean +4.2% y/y vs consensus +4.3% and +5.2% in Q3

      • December private sector credit +0.4% m/m vs +0.4% November

    • New Zealand January

      • ANZ Business Confidence +36.6 vs December +33.2

    • South Korea December

      • Industrial production +0.6% m/m vs consensus +0.1% and revised +3.6% in prior month (18:00 ET)

        • Industrial production +6.2% y/y vs consensus +5.3% and revised +5.5% in prior month

  • Markets:

    • Nikkei: 220.85 or +0.61% to 36286.71

    • Hang Seng: (218.38) or (1.39%) to 15485.07

    • Shanghai Composite: (41.98) or (1.48%) to 2788.55

    • Shenzhen Composite: (48.22) or (3.03%) to 1544.90

    • ASX200: 80.50 or +1.06% to 7680.70

    • KOSPI: (1.72) or (0.07%) to 2497.09

    • SENSEX: 583.29 or +0.82% to 71723.19

  • Currencies:

    • $-¥: +0.02 or +0.01% to 147.6080

    • $-KRW: +3.64 or +0.27% to 1332.5300

    • A$-$: (0.00) or (0.45%) to 0.6573

    • $-INR: (0.11) or (0.13%) to 83.0482

    • $-CNY: (0.00) or (0.01%) to 7.1584