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StreetAccount Summary - Asian Market Recap: Nikkei +1.90%, Hang Seng +0.47%, Shanghai Composite +0.39% as of 03:10 ET

Mar 01 ,2024

• Synopsis:

  • Asian equities traded mostly higher Friday. Japan's Nikkei 225 led the gainers with an almost 2% gain to hit new record high, Topix was also strong. Australia's ASX and India's Nifty also hit fresh record highs. More solid gains in mainland China, Hong Kong had a choppy day but closed higher. Southeast Asia mixed as Thailand saw more losses after a worrying PMI report. Taiwan a few points down, South Korea closed for a holiday. US futures point to a positive open, Europe higher again in opening trades. US dollar flat, yen weaker. Treasury yields mixed. Crude futures continue to trade in a tight range. Little movement of note in industrial metals.

  • Asia markets starting March with solid gains with new record highs in Australia, India and Japan, where the Nikkei 225 came within a handful of points of 40K on read through from Wall Street's overnight gains and a weaker yen. The yen largely gave up yesterday's gains after BOJ Governor Ueda walked back board member Takata's dovish remarks on Thursday. China PMIs mixed with official manufacturing gauge stuck in contraction amid stronger declines in production and exports; NBS blamed weakness on LNY holiday. Caixin PMIs continued to expand on further upturn in production and new work. Non-manufacturing PMI also topped consensus to reach highest since September, driven by pickup in services.

  • Asia-ex Regional PMIs showed January's positive momentum stalled; Thailand's reading and future-facing sub-indices were notably weak. Japan manufacturing shrank at steepest pace since Aug-2020 due to weak domestic and global demand. South Korea semiconductor exports surged at fastest pace since Oct-17. Private data showed another heavy fall in China new home sales.

  • SK Hynix (000660.KS) has approached Kioxia to produce high bandwidth memory at its Western Digital joint venture plant in Japan. Siam Commercial Bank (SCB.F.TB) is to buy Home Credit Vietnam for $860M as it moves to expand its regional footprint. Syrah Resources (SYR.AU) said it is to supply natural graphite from its Mozambique operation to Posco Future M (003670.KS). Adani Energy (539254.IN) is planning to issue around $400-500M through a bond private placement to US institutional investors. Paytm's (One97 Communications, 543396.IN) has severed some ties with its payments bank unit, which has been ordered to close by the RBI, to address compliance concerns.

• Digest:

  • China official PMIs mixed amid Lunar New Year holiday effects:

    • Official manufacturing PMI was 49.1 in February, matching expectations. Follows 49.2 in the previous month and marks the fifth straight contraction. Details showed stronger declines in production and exports while new order weakness was steady. Input price inflation eased further and now virtually neutral as output price declines narrowed. Employment fell at a marginally faster pace while finished goods inventories logged a more notable drop. By industry size, large firms were steady at slight expansion while main drag came from weaker conditions at small firms. Nonmanufacturing PMI was 51.4 (highest since September) above consensus and prior month's 50.7. Improvement entirely driven by pickup in services, outweighing small deceleration in construction. Results left composite PMI steady at 50.9. NBS attributed softer manufacturing activity to the off-season due to LNY holidays which saw recovery in hometown migration with Covid restrictions fully lifted. Also explains the weaker momentum among small firms. Services strength similarly put down to LNY effects which were a tailwind. Construction activity was dampened by LNY as well as unfavorable weather. Separately, Caixin manufacturing PMI edged up to 50.9 from 50.8 and above consensus 50.6. Tone remained upbeat relative to the official gauge.

  • BOJ Governor Ueda walks back Takata's hawkish remarks:

    • Bloomberg cited comments from BOJ Governor Ueda at the San Paulo G20, reaffirming his stance the central bank is still not in a position to foresee the achievement of the sustainable and stable inflation target. Follows board member Takata's speech yesterday suggesting achievement was now in sight and called for a review of the easing framework. Ueda repeated shunto results in March will be key to confirming a virtuous wage/price cycle and concurred with Takata's optimism toward positive results noting union demands outpacing last year's levels. Apparent contrast in views so far not gaining much traction. Main takeaway from Takata's speech was that a March rate hike remains a possibility. Nikkei continued to refer to a QUICK poll conducted in mid-February showing some 20% of respondents in the March camp with 60% in April. Recall that latest foreign press surveys indicated a stronger concentration in April. Nikkei cited Daiwa Securities reaction to Takata's speech that likelihood of a March hike has increased. Takata headline effects took USD/JPY down to the 149 handle Thursday, though has since fully retraced back into the 150 range.

  • Surge in South Korean semiconductor shipments underpins February export growth:

    • South Korean export growth eased to 4.8% y/y in February from 18% in January, though still better than 1.9% forecast in a Reuters poll. When adjusting for lunar new year-related distortion, monthly exports rose 12.5% February export growth underpinned by 66.7% surge in semiconductor shipments - highest since Oct-2017 and reinforcing bullish narrative around AI-driven chip demand. At the same time, data masked weakness elsewhere with China-bound shipments falling 2.4% and offsetting 9% rise in US-bound shipments. Auto exports shrunk 7.8%. Imports contracted 13.1% y/y, worse than 10.4% fall expected and January's 7.9% drop, representing a 12th straight contraction. Exports largely buttressing South Korea's economy as high household debt and interest rates constrain consumption while investment activity remains weak. At the same time BOK sought to douse easing expectations at its February meeting with Governor Rhee saying H1 rate cut unlikely.

  • Private surveys show property market woes in China persist:

    • Survey by China Index Academy showed average new home prices in 100 cities rose 0.14% m/m in February, compared with 0.15% increase in January, while 0.57% y/y higher versus 0.43% gain in prior month. Resale home prices fell 0.37% m/m, improving from 0.56% drop in January while still logged 22^nd consecutive monthly decline. 38 cities saw m/m drops in new home prices, compared with 33 in January while 99 witnessed dips in resale prices. Separate survey from China Index Academy showed sales among top 100 developers plunged 51.6% y/y in first two months, while sales dropped 29.3% m/m and 64.7% y/y in February on unfavorable base effects. Data largely in line with China Real Estate Information Corp. (CRIC), which in own survey showed value of new home sales from 100 biggest builders slid 60% y/y in February, compared with 34.2% in January, while down 20.9% m/m. Decline partly due to seasonal sales drought during LNY holiday. Bloomberg added a meaningful rebound hinges on stronger or unconventional measures.

  • Asia-ex manufacturing PMIs shows stalled recovery:

    • S&P Global Asia-ex Japan and China manufacturing PMIs in February plateaued from January's improvements with few substantial accelerations or prominent signs of trouble ahead. New orders, output and sentiment broadly improved or, where they did slip, did so modestly. Exception was Thailand where manufacturing base shrank at accelerated pace with new orders, new work and depleted backlog signaled further slowdown ahead; February's PMI at 45.3 from January's 46.7. Taiwan PMI fell to 48.6 from 48.6 as output new orders, purchasing activity contracted again but at reduced pace. ASEAN region 50.4 from 50.3 although new orders fell slightly amid small increase in production. Indonesia's expansion slowed to 52.7 from 52.9 as domestic demand consolidated and export demand slowed. Philippines benefited from improved new orders but output hampered by supply shortages; PMI 51.0 from 50.9. Malaysia continued recovery as production, new orders' deceleration slowed; PMI 49.5 from 49.0. Vietnam saw sustained new orders, improvement business sentiment; PMI 50.4 from 50.3.

  • Notable Gainers:

    • +13.8% 2858.HK (Yixin Group): reports FY adjusted net income CNY910.1M, +32% vs year-ago CNY688.3M

    • +3.2% 6752.JP (Panasonic): forecasts year-end dividend ¥17.50/share vs year-ago ¥15.00/share

    • +2.2% 7832.JP (BANDAI NAMCO Holdings): guides FY net income attributable ¥98.00B vs FactSet ¥82.89B

    • +1.1% 2413.JP (M3): guides year-end dividend ¥21/share vs year-ago ¥19/share

  • Notable Decliners:

    • -6.7% 2342.HK (Comba Telecom Systems Holdings): guides FY net income attributable to decline at least 90% vs year-ago HK$190M

    • -6.3% 17.HK (New World Development): reports H1 net income attributable cont ops HK$502.0M, (13%) vs year-ago HK$575.8M, revenue HK$17.07B, (25%) vs year-ago HK$22.79B

    • -6.2% 1257.HK (China Everbright Greentech): guides FY net income attributable (HK$300M) vs FactSet (HK$413.3M)

    • -1.9% 9999.HK (NetEase): reports Q4 non-GAAP EPADS CNY11.34 vs FactSet CNY12.19, revenue CNY27.14B vs FactSet CNY28.10B

• Data:

  • Economic:

    • China February

      • Official manufacturing PMI 49.1 vs consensus 49.1 and 49.2 in prior month

        • Non-manufacturing PMI 51.4 vs consensus 50.7 and 50.7 in prior month

        • Composite PMI 50.9 vs 50.9 in prior month

      • Caixin manufacturing PMI 50.9 vs consensus 50.6 and 50.8 in prior month

    • Japan

      • January unemployment rate 2.4% vs consensus 2.4% and revised 2.5% in prior month

        • Job offers to applicants ratio 1.27 vs consensus 1.27 vs 1.27 in prior month

      • February final manufacturing PMI 47.2 vs preliminary 47.2 and 48.0 in prior month

  • Markets:

    • Nikkei: 744.63 or +1.90% to 39910.82

    • Hang Seng: 78.00 or +0.47% to 16589.44

    • Shanghai Composite: 11.85 or +0.39% to 3027.02

    • Shenzhen Composite: 18.41 or +1.08% to 1725.39

    • ASX200: 46.90 or +0.61% to 7745.60

    • KOSPI: Closed

    • SENSEX: 1,084.31 or +1.50% to 73584.61

  • Currencies:

    • $-¥: +0.60 or +0.40% to 150.5760

    • $-KRW: (1.94) or (0.15%) to 1333.8200

    • A$-$: (0.00) or (0.02%) to 0.6497

    • $-INR: (0.04) or (0.05%) to 82.8680

    • $-CNY: +0.01 or +0.13% to 7.1975