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StreetAccount Summary - Asian Market Recap: Nikkei (0.02%), Hang Seng +1.70%, Shanghai Composite (0.26%) as of 03:10 ET

Mar 06 ,2024

• Synopsis:

  • Asian equities finished mixed Wednesday. The Hang Seng bounced back from yesterday's losses although did finish off its high; mainland benchmarks eased back a few points. Small gains in Australia, Japan mixed with Topix higher but Nikkei flat. Seoul lower again, Taipei higher again. India soft, Southeast Asia mixed. US futures flat, Europe mixed at the open. US dollar soft, AUD regained some of yesterday's losses, yen notably stronger. Treasury yields higher across tenors, JGB yields also higher, China 10Y government bond yield at record low. Crude higher, precious metals lower, industrial metals mixed. Bitcoin volatility continues, currently sharply higher on the day.

  • Asia benchmarks responding to regional drivers today although there was some early pressure on technology-related stocks. Japan's Nikkei slipped first thing but rallied, the Kospi saw a second day of losses while the Taiex reached fresh record highs. Hong Kong responded to sharp falls yesterday post a disappointing NPC session to erase some of the losses but it sold off somewhat in the afternoon. Equities' mixed response to the NPC in contrast to sovereign bonds that rallied for a second day to send yields to record lows on bets the PBOC will have to ease policy soon to obtain Beijing's ambitious growth goals. At the NPC press conference late on, PBOC Governor admitted the country had enough room for easing policy, especially with more RRR cuts.

  • Australian GDP growth in-line with forecasts as stronger net exports and government spending offset weak inventories and household consumption. South Korea inflation accelerated by more than expected, backing up recent BOK's reticence to cut rates in the near term.

  • Toyota Motor (7203.JP) said it had reached an agreement with Panasonic (6752.JP) to make their Primearth joint venture a wholly-owned subsidiary. Indorama Ventures (IVL.TB) says it aims to raise around $700M from the listing of its US unit next year following a significant business overhaul. ANZ Bank (ANZ.AU) sold a 16.5% stake in Malaysian lender AmBank (1015.MK) for $443.7M, will continue to own 5.2%. Qantas Airways (QAN.AU) was fined A$250k ($162K) for illegally firing an employee over Covid safety concerns. The RBI has barred JM Financial (523405.IN) from extending loans against shares and bonds including financing subscriptions to IPOs; shares sharply lower.

• Digest:

  • China NPC announcements underwhelm:

    • Press takeaways largely indicated NPC announcements were seen as underwhelming, citing the lack of forceful measures and substance to back up economic goals (Reuters, Bloomberg). Also reinforced the gap between the government growth target of around 5% and consensus forecasts of 4.6%. Skepticism toward achieving the target this year based on combination of higher base comparison amid sluggish growth momentum. On growth-related policies, attention on real estate centered around reference to a 'new development model' which may lead to government purchases of distressed private-sector projects for rent and/or construction of affordable housing. "New productive forces" phrase also mentioned, believed to describe domestic tech innovation though prompted concerns this policy favors the supply-side economy when demand is weak. Some optimism about efforts to stoke consumer demand, though announcements lacked measurable measures.

  • Australian GDP growth in-line, consumption very weak:

    • Australian Q4 GDP grew 0.2% q/q, in-line with consensus but down on prior quarter's upwardly revised 0.3%. Took yearly rate growth from 2.1% to 1.5%, a touch better than expected but weakest in 23 years outside of pandemic. Main contributions came from stronger public demand and net exports, offsetting drag from weaker investment and slump in inventories. Household consumption growth negligible as consumers spent more on essential goods and reduced spending on discretionary items and services. Household savings ratio rose for first time in nine quarters, though mostly due to jump in public sector wage growth and increase in welfare payments. Improvement in productivity growth driven by fall in worked hours while domestic while demand deflator rose at smallest pace in two years. Economists viewed data as consistent with a weak economy exerting downward pressure on inflation, reinforcing expectations of a dovish pivot in H2.

  • South Korea inflation accelerates to support BOK pushback on rate cut calls:

    • South Korea's February consumer inflation rose to 3.1% y/y versus consensus 3.0%, and 2.8% in January, as food prices accelerated 6.9% y/y. Transport costs rose 2.0%, while restaurant & hotel prices rose 3.8% y/y. Headline CPI reading of 0.5% m/m from 0.4% in January, according to Statistics Korea. Core inflation rose 2.5% y/y, unchanged from January; 0.3% m/m. Bank of Korea said it expects inflation to be volatile again in March before stabilizing as living costs including food prices will remain high for some time (Reuters). Last month, bank pushed back on calls for rate cut to support consumer with inflation still well above bank's 2.0% target. Accelerated food prices continue to be problematic for Asia central banks: Philippines Tuesday reported accelerated CPI of 3.4% y/y due in part to 23.7% increase in rice costs y/y, highest increase in 15 years (Bloomberg).

  • China pledges to advance in technology self-reliance:

    • China vowed to mobilize whole nation's resources to speed up science and technology breakthroughs, reaffirming priority to become self-reliant in key areas such as AI and semiconductors amid rivalry with US (Bloomberg). "Technology" was mentioned 26 times in Premier Li Qiang's work report at Tuesday's NPC session, highest since at least 2015, according to Soochow Securities. Central government will also increase funding on science and technology by 10% to CNY370.8B ($52B) this year to further research considered of national importance and promote national champions. Meanwhile figures from Counterpoint Research showed Apple's iPhone sales in China plunged 24% during first six weeks of 2024, while main competitor Huawei saw unit sales jump 64% in the same period when whole mobile market shrank by 7% (Reuters). Bloomberg noted Huawei's launch of advanced model Mate 60 Pro triggered wave of patriotic buying and took share away from Apple.

  • RBI extends crackdown on India's non-bank finance companies:

    • India's non-bank finance companies (NBFC) facing more scrutiny with JM Financial (523405.IN) down ~20% after RBI banned it from issuing loans against shares and debentures, Cited "serious deficiencies" in loans sanctioned by company after review found it aided customers bid for IPO and NCD offerings using loaned funds (Bloomberg) Comes after RBI on Monday ordered IIFL Finance (532636.IN) to stop providing gold loans due to "material supervisory concerns". Shares down 36% since. RBI also banned Paytm from accepting new deposits in January and local press report Paytm's (543396.IN) banking license likely to be cancelled (Financial Express). Increased regulatory oversight of NBFC's seen as necessary to prevent systemic risks, but also sparking concerns tighter flow of credit could slow debt-fueled consumption. UBS estimated 25-28% of total retail loans outstanding originated from outside traditional banks, and 7% of total India consumption funded by non-bank retail loans over last 12 months compared to 3% a year earlier.

  • Notable Gainers:

    • +12.6% 6966.JP (Mitsui High-tec): guides FY net income attributable ¥15.50B vs prior guidance ¥11.70B

    • +3.4% 9866.HK (NIO Inc): reports Q4 adjusted EPADs (CNY0.39) vs StreetAccount (CNY2.34), revenue CNY17.10B vs StreetAccount CNY16.92B and guidance CNY16.08-16.70B

    • +2.8% 2333.HK (Great Wall Motor): reports February sales volume 71,027 units, +4.1% y/y

    • +1.1% 4507.JP (Shionogi & Co.): obtains standard approval from Japan's Ministry of Health, Labour and Welfare for Xocova, a novel anti-SARSCoV-2 drug for indication of SARS-CoV-2 infection

    • +0.8% 8.HK (PCCW Ltd): China Merchants Group reportedly exploring bid for stake in PCCW's fiber business

    • +0.6% 6752.JP (Panasonic): Toyota Motor agrees to acquire balance stake in Primearth EV Energy from Panasonic; terms undisclosed

  • Notable Decliners:

    • -5.6% 377300.KS (kakaopay): Alipay Singapore reportedly sells 3.0M kakaopay shares via block trade

    • -5.0% 1015.MK (AMMB Holdings): ANZ Group sells 16.5% of shareholding in AmBank via block trade at MYR3.85 per share

    • +0.5% 002460.CH (Ganfeng Lithium Group): to subscribe for no less than 14.8% stake in Proyecto Pastos Grandes for CNY503.9M ($70.0M)

    • -0.5% 4689.JP (LY Corp.): receives MIAC administrative guidance regarding information leakage and unauthorized access

• Data:

  • Economic:

    • Australia Q4

      • GDP +0.2% q/q vs consensus +0.2% and +0.2% in Q3

        • GDP +1.5% y/y vs consensus +1.4% and +2.1% in Q3

    • South Korea February

      • CPI +3.1% y/y vs consensus +3.0% and +2.8% in prior month

        • CPI ex-food & energy +2.5% y/y vs consensus +2.5% and +2.5% in prior month

  • Markets:

    • Nikkei: (6.85) or (0.02%) to 40090.78

    • Hang Seng: 275.45 or +1.70% to 16438.09

    • Shanghai Composite: (7.86) or (0.26%) to 3039.93

    • Shenzhen Composite: 3.75 or +0.22% to 1722.05

    • ASX200: 9.30 or +0.12% to 7733.50

    • KOSPI: (7.91) or (0.30%) to 2641.49

    • SENSEX: (175.48) or (0.24%) to 73501.66

  • Currencies:

    • $-¥: (0.44) or (0.30%) to 149.5950

    • $-KRW: (3.12) or (0.23%) to 1333.4900

    • A$-$: +0.00 or +0.22% to 0.6516

    • $-INR: (0.01) or (0.02%) to 82.8985

    • $-CNY: +0.00 or +0.02% to 7.1982