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StreetAccount Summary - Asian Market Recap: Nikkei +2.67%, Hang Seng +0.10%, Shanghai Composite +0.99% as of 04:10 ET

Mar 18 ,2024

  • Synopsis:

    • Asian equities advanced Monday. Nikkei outperformed region with semis seeing notable gains. Greater China stocks higher with ChiNext leading, boosted by CATL (300750.CH) sharp gains. Taiex and Kospi both gained. ASX flat. India trading higher. S&P 500 and Nasdaq futures gaining. Treasury yields little changed, JGBs firmer with curve flattening attributed to short covering. Yen near lowest against dollar in two weeks. Bitcoin retreating from weekend high. Crude nudging higher while gold edging lower.

    • China Jan-Feb industrial production growth beat expectations while retail sales growth slowed by less than forecast. Eight-day LNY holiday in February supported revenue from tourism and hospitality sectors, also helping lift growth in oil refinery output. Fixed asset investment notably higher than consensus with infrastructure strong. Real estate investment declines narrowed to 9% y/y drop in first two months, compared with 24% fall in December, while remaining a major concern for Chinese economy with still poor demand. Jobless rate also edged up slightly. Overall positive data added to other macro data, including CPI and exports, to show some parts of China's economy is gaining traction while also raising doubts over how soon policymakers will shore up more support needed to boost demand and reach 5% growth target.

    • BOJ is expected to end NIRP this week. Follows substantial wage hike agreements between unions and large firms at shunto wage talks. Alongside NIRP, YCC also expected to be scrapped and new purchases of ETFs and J-REITs likely to be ceased. Attention now centers on policy path beyond March and Governor Ueda's press conference. Some thought he would reiterate recent guidance on financial conditions remaining accommodative, putting downward pressure on yen. BOJ also conducted reverse repo operation for first time in about a month, seen as preparatory move for potential yield volatility around Tuesday's decision. Japan core machinery orders fell by more than expected with weakness driven by manufacturing sector. In other developments, Singapore non-oil exports unexpectedly contracted following prior month's strong gain, as growth in exports of electronics products was offset by fall in non-electronics shipments.

    • Nissan (7201.JP) and Honda (7267.JP) announced on Friday an agreement to begin talks on a potential strategic partnership to collaborate on electric vehicles and automotive software to compete with rivals in China and US. Xpeng (9868.HK) to release cheaper brand of EV within next month and will be priced between CNY100k to 150k; Xpeng's cars will also be launched in Singapore by H2 2024. TSMC (2330.TT) is looking at building advanced chip packaging capacity in Japan. Several dollar bonds of Adani Group fell most in more than half a year, including a note from Adani Ports & Special Economic Zone (512599.IN) due in 2041 after US prosecutors widened probe of the conglomerate.

  • Digest:

    • China activity data headlines beat, but real estate details notably weak:

      • Industrial production rose 7.0% y/y in Jan-Feb, above consensus 5.2% and follows 6.8% in December. Generators, smartphones, NEVs and integrated circuits all well in double digits, though aggregate passenger cars were negative. Most primary industries including steel and crude also firmer at the start of the year. Retail sales were up 5.5% vs consensus 5.0% though still slowed from 7.4% in December. Broader measure including online sales of goods rose 14.4%. Almost all categories were positive with sharpest growth in catering, tobacco & alcohol, leisure goods and communication equipment. Autos up 8.7%. Main surprise came in fixed asset investment growth of 4.2%, notably higher than consensus 3.2%, following 3.0% in 2023. Infrastructure investment grew 6.3% after finishing 2023 at 5.9%. Real estate investment declines narrowed to 9.0% from 9.6%. However, this contrasted with substantial deterioration in major components -- sales of new buildings dropped 20.5% vs prior 8.5% slide, new construction starts were down 29.7%, real estate funding tumbled 24.1% from 13.6%. Urban unemployment rate edged up to 5.3% from 5.2%.

    • BOJ expected to end negative rates this week:

      • Saturday Nikkei top story said BOJ is expected to end NIRP this week, marking the first rate hike since February 2007. Also corroborated by Kyodo sources. BOJ began preparations last Friday with the leading plan to raise short-term rate currently at -0.1% by more than 10 bp to a range of 0%~0.1%. Follows substantial wage hike agreements among large firms where Rengo first tallies showed an average increase of 5.28% while small firms averaged 4.42%. With base pay also lifted by 3.7%, BOJ thinks economic conditions now conducive for maintaining stable 2% inflation. BOJ source suggested this year's wage hikes cleared a level that would be accepted by even cautious reflationists. Alongside NIRP, YCC also expected to be scrapped and new purchases of ETFs and J-REITs likely to be ceased. Article noted government officials became increasingly receptive to a March move, citing a senior Finance Ministry official saying an exit in March would be preferable and there is no need to wait until April. Sunday page-two article echoed prior reports that JGB purchases would continue at some level including fixed-rate operations to manage yield volatility after the move.

    • BOJ operations under microscope amid rate hike expectations:

      • Nikkei reported BOJ conducted a gensaki (reverse repo with JGB collateral) operation Monday for the first time in about a month. Size was JPY3T ($20B) which attracted JPY3.4T in bids with a time horizon spanning March 19~21. Average accepted yield was -0.098%. Article cited broad upward pressures on rates amid heightening expectations of an imminent BOJ rate hike, leading traders to conclude the measure was meant to prepare for market reactions. JGBs were broadly firmer in the morning session with curve flattening; 10y yield fell from a high of 0.795% (highest since early December) to 0.765% in the morning session. Price bounce was broadly attributed to short-covering given a rate hike had already been priced in (Nikkei). Short-term rates remain broadly steady with uncollateralized overnight call rate (TONA) weighted average little changed from Friday's -0.0005%. Developments follow Nikkei's report indicating BOJ is expected to end NIRP/YCC at the March 18-19 MPM. Particular attention in fixed income market on whether BOJ continues with JGB purchases if YCC is scrapped.

    • China to tighten supervision of IPOs, calls for more shareholder payouts:

      • Reuters cited a CSRC statement published Friday disclosing new rules tightening scrutiny over IPOs, public companies and underwriters aimed at reviving investor confidence. Regulators will vet IPOs more closely, crack down on securities fraud, and encourage listed firms to increase dividend payouts and buy back shares. Measures add to IPO scrutiny after the regulator has already slowed the pace of offerings under new CSRC chairman Wu Qing. Statement stressed that accounting fraud and false statements will be severely punished. Vowed to crack down on securities fraud and accounting manipulation such as so-called big-bath strategies that exaggerate poor financial results in order to make future performance look better. CSRC will also prevent major shareholders from reducing holdings illegally, for example via short-selling. Also urged listed companies to increase dividend payouts and take concrete measures to strengthen market value management. Listed companies are encouraged to buy back shares, and constituents of main stock benchmarks are required to formulate plans for stock purchases in the event of share price slumps.

    • Singapore exports fall in February, well below expectations:

      • Singapore's February non-oil domestic exports (NODX) fell 0.1% y/y, reversing from sharp growth of 16.7% in prior month and below consensus 4.7%. NODX declined 4.8% m/m, also in contrast with 2.2% increase in January and came worse than 0.4% contraction expected. Non-electronics decreased while electronics grew. Non-electronics exports, including food preparations, specialty chemicals & electrical circuit apparatus, dropped 1.5% y/y from a high base, after 21.1% expansion in January. Meanwhile electronics products exports rose 5.2% y/y, following 0.6% increase in prior month. Growth was mainly driven by ICs, which grew for first time after 18 months of decline. For destinations, exports to Hong Kong, US and Indonesia grew, while dropped to Japan, Malaysia, Taiwan, EU, Thailand, South Korea and China. EnterpriseSG upgraded its full-year forecast for NODX in January, expecting "modest growth" for 2024 and an expected recovery in electronics.

    • Notable Gainers:

      • +17% 489.HK (Dongfeng Motor Group): China reportedly soon to adjust assessment system of three state-owned automakers to increase EV investments, M&As

      • +5.5% 300750.CH (Contemporary Amperex Technology): reports FY net income attributable CNY44.12B vs guidance CNY42.5-45.5B and FactSet CNY43.65B, EBIT CNY53.72B vs FactSet CNY49.98B

      • +4.4% 4578.JP (Otsuka Holdings): Sumitomo Pharma amends agreement for four psychiatry and neurology compounds with Otsuka, grants Otsuka exclusive worldwide rights to develop, manufacture, and commercialize ulotaront and SEP-380135 for all indications

      • +4.1% 7201.JP (Nissan Motor): Nissan, Honda sign MoU for strategic partnership in vehicle electrification, intelligence

      • +2.7% 7267.JP (Honda Motor): Nissan, Honda sign MoU for strategic partnership in vehicle electrification, intelligence

      • +2% 6758.JP (Sony): reportedly has halted manufacturing of PSVR2 headset until it resolves backlog of unsold inventory

    • Notable Decliners:

      • -5.9% 3606.HK (Fuyao Glass Industry Group): reports FY net income attributable CNY5.63B vs StreetAccount CNY5.66B

      • -4.8% 2357.TT (ASUSTek Computer): reports FY EPS NT$21.44 vs FactSet NT$22.82, EBIT NT$11.16B vs FactSet NT$12.61B; guides Q1 PC (10%) q/q

  • Data:

    • Economic

      • China

        • Jan-Feb industrial production +7.0% y/y vs consensus +5.2% and +6.8% in December

          • Retail sales +5.5% y/y vs consensus +5.0% and +7.4% in December

          • Fixed asset investment (YTD) +4.2% y/y vs consensus +3.2% and +3.0% in December

          • Unemployment rate 5.3% vs 5.2% in December

      • Japan

        • January core machinery orders (1.7%) m/m vs consensus (0.8%) and revised +1.9% in prior month

      • Singapore

        • February non-oil exports (0.1%) y/y vs consensus +4.7% and +16.7% in prior month

          • Non-oil exports (4.8%) m/m vs consensus (0.4%) and +2.2% in prior month

    • Markets:

      • Nikkei: 1,032.80 or +2.67% to 39740.44

      • Hang Seng: 16.23 or +0.10% to 16737.12

      • Shanghai Composite: 30.29 or +0.99% to 3084.93

      • Shenzhen Composite: 28.77 or +1.62% to 1803.45

      • ASX200: 5.50 or +0.07% to 7675.80

      • KOSPI: 19.00 or +0.71% to 2685.84

      • SENSEX: 203.01 or +0.28% to 72846.44

    • Currencies:

      • $-¥: +0.09 or +0.06% to 149.1470

      • $-KRW: +1.66 or +0.13% to 1332.6100

      • A$-$: +0.00 or +0.09% to 0.6565

      • $-INR: (0.03) or (0.03%) to 82.9009

      • $-CNY: +0.00 or +0.01% to 7.1964

This information and data is provided for general informational purposes only. The Bank of New York Mellon and our information suppliers do not warrant or guarantee the accuracy, timeliness or completeness of this information or data. We provide no advice nor recommendation or endorsement with respect to any company or securities. We do not undertake any obligation to update or amend this information or data. Nothing herein shall be deemed to constitute an offer to sell or a solicitation of an offer to buy securities.
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