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StreetAccount Summary - Asian Market Recap: Nikkei (1.40%), Shanghai Composite +1.19%, Kospi +0.04% as of 04:10 ET

Apr 01 ,2024

• Synopsis:

  • Asia equities ended mixed Monday in light holiday-affected trade. Mainland China stock ended sharply higher after encouraging economic data, marginal gains in South Korea, most of Southeast Asia was higher, while India is trading at three-week highs. Tokyo markets led the decliners with Nikkei 225 breaking below 40K, Taipei was also down and Jakarta sharply lower on a high inflation print. Hong Kong and Australia markets remained closed. US and European futures higher with most equity markets still closed for Easter Monday. US dollar flat, yen, yuan and AUD also largely unchanged. Treasury yields mixed. Crude blends higher, gold surging to fresh record highs. Industrial metals mixed as iron ore sets fresh 10-month low.

  • Asia equities polarized from the bell as Japan's Nikkei fell to three-week lows on a downbeat Tankan survey, while China's mainland boards responded positively to economic data. The March BOJ Tankan survey for Q1 fell to +11 from +13 in Q4, its first fall in four quarters, with automakers seeing a significant drop. Markets reacting negatively to the print, which added to a decline in industrial output and soft Tokyo inflation readings on Friday but which were offset slightly by dovish comments from a former BOJ official who said the bank's next rate hike would come in October, at the earliest.

  • China official manufacturing March PMI beat expectations and marked the first expansion in six months, underpinned by growth in production, new orders and exports. Results were broadly consistent with Caixin manufacturing PMI. On the downside, latest CREIC data showed new home sales remained in deep contraction in March. Nevertheless, markets reacted positively to the data with mainland China boards advancing. Other Asia PMIs were mixed with a fresh slowdown detected in South Korea and Taiwan, and another small uptick overall in ASEAN, although the mix within the region varied. South Korea exports missed forecasts but were still higher y/y for a sixth consecutive month. Indonesia inflation ticked higher for the first time since last August but remains within the BoI's target range.

  • Rakuten (4755.JP) says it will reorganize its financial unit to integrate banking, securities and cards. Denso (6902.JP) said it had sold a 0.9% stake in Toyota Industries (6201.JP) with its remaining 8.2% stake to be sold in nine installments over the next two years. SAIC Motor (600104.CH) will cut thousands of positions this year at its GM and Volkswagen joint ventures, as well as a EV car unit as competition in the auto market increases. BHP Group's (BHP.AU) top economist said President Xi's ideological grip over China SoEs could exacerbate the country's decline in the second half of the century. Indian Oil (530965.IN) and Panasonic's (6752.JP) energy unit are to form a joint venture to manufacture lithium-ion cells in India.

• Digest:

  • China official manufacturing PMI expands for first time in six months:

    • Official China manufacturing PMI was 50.8 in March, above consensus 49.9. Follows 49.1 in the previous month and marks the first expansion since September. Reflects broad rebound in production, new orders and exports -- latter logging first expansion in a year and catching up with latest strength in customs exports. Inflation gauges were mixed with input prices rising somewhat faster while output price declines accelerated. Employment and finished goods inventories fell at a slower pace. Breadth was notable as 15 of 21 sectors logged growth while enterprises of all sizes registered improvements and moved into expansion territory. NBS attributed results to resumption of operations after the Lunar New Year holiday. Nonmanufacturing PMI also improved to 53.0 from 51.4 to a nine-month high. Building evidence of a Q4 trough mainly reflects turnaround in services sector and boosted by better construction activity, albeit NBS noted real estate subcomponent remained in contraction. Composite PMI rose to 52.7 from 50.9, marking the highest since May. Similarly, Caixin manufacturing PMI was 51.1 in March vs consensus 51.0 and prior 50.9, which also showed stronger growth in output, new orders and exports.

  • BOJ Tankan headlines beat expectations:

    • Headline BOJ Tankan large manufacturers business conditions index was 11 in March, just above consensus forecast of 10. Follows 13 in December, revised up from 12 and marks the first decline in a year. Main drag came from auto sector, consistent with expected impacts from temporary operations suspensions due to certification scandals. Other sectors were mixed, leaving primary industries flat on the quarter while outsized auto weakness tipped downstream sectors mildly negative. Large nonmanufacturing index was 34 in March, also above consensus 33, while December was revised to 32 from 30. Weakness was skewed by sharp declines in communications and utilities. Large firms' FY23 capex growth revised down to 11.5% from 13.5% though above consensus 9.2%. Weaker projection was anticipated by seasonal factors as companies consolidate plans for the past year. Initial FY24 forecast points to further 4.0% growth, on par with starting points in prior few years and above the longer-term average. Inflation expectations were unchanged and remained above 2% in all time horizons.

  • Asia ex China and Japan PMIs improve in ASEAN, contract in Taiwan and South Korea:

    • March S&PGlobal PMIs outside of China and Japan were mixed as South Korea returned to contraction for first time in 2024, and Taiwan's slowdown continued albeit at a slower pace. South Korea manufacturing PMI at 49.8 as falls in domestic new orders and output were offset by improvement in new export orders. Taiwan also saw new orders contract but at a slower pace as firms reported weak demand; PMI increased to 49.3 from 48.6. Indonesia PMI climbed to more than two-year high 54.2 from 52.7, its fastest expansion since Oct-21 despite drop in exports. Thailand improved to 49.1 from 45.3, slowest contraction in eight months. Malaysia at three-month low 48.4 from 49.5 as new orders and output fell again. Philippines manufacturing contracted for first time since Jul-22, sentiment plunged to four-year low. ASEAN PMI overall inched higher 11-month high 51.5 as new orders returned to growth.

  • South Korea exports rise for sixth straight month in March:

    • South Korea exports grew for sixth consecutive month in March, boosted by robust performance of chips. Exports rose 3.1% y/y to $56.56B, came below 5.2% expected and 4.8% rise in February. Imports declined 12.3% y/y to $52.2B, compared with consensus 8.1% decline and 13.1% fall in prior month, resulting in a trade surplus of $4.3B. Government attributed growth to rebound in memory chip prices due to supply adjustments, coupled with higher demand for premium products including high bandwidth memory chips (Yonhap). Outbound shipments of chips grew for fifth consecutive month, rising 35.7% (Reuters) while shipments of automobiles dropped 5% mainly due to high base effect. Exports to China rose marginally at 0.4% while those to US gained for eight strong months, rising 11.6% on strong demand for premium cars. Industry minister Ahn Duk-guen said trajectory of exports, especially in key sectors, such as ships and chips, is likely to sustain growth momentum in Q2.

  • Markets bracing for yen intervention as authorities signal greater concern:

    • Nikkei discussed market anticipation of FX intervention after government officials expressed increased caution on yen weakness. Noted speculation that MOF is eyeing a USD/JPY level of 152 as the line in the sand and recalled last Wednesday's session high of 151.97 that prompted a joint meeting between MOF/FSA/BOJ officials, which was said to have been brought forward from Thursday to maximize headline effects (Reuters). Nikkei said attention on government signals and yen levels has overshadowed authorities' stated monitoring of volatility, which has been relatively benign. Implied vol and trading ranges remain lower than market conditions leading to the prior intervention operation in 2022. However, story added that many are skeptical of the effectiveness of any intervention operation given any action would be limited to smoothing operations as G7 members oppose intervention targeting specific levels. Also recalled the previous intervention on 21-Oct-22 was the biggest daily amount since April 1991 though impact was fleeting. Discussion turned to underlying dynamics, highlighting Friday's US payrolls report as the key risk event, where a stronger than expected result would exacerbate rate differentials.

  • Notable Gainers:

    • +13.5% 214420.KS (TONYMOLY Co.): South Korea Jan-Feb cosmetics exports +36.2% y/y

    • +3.0% 4755.JP (Rakuten Group): confirm discussions aimed at the reorganization of Rakuten Group's FinTech Business

    • +2.8% 541154.IN (Hindustan Aeronautics): receives INR11.73B contract for supply of gas turbines

    • +1.9% 7003.JP (MITSUI E&S Co.): has started discussions on port cranes with potential partner in US

    • +1.4% 000660.KS (SK Hynix): South Korea March semiconductor exports $11.7B, +35.7% y/y

  • Notable Decliners:

    • -9.8% 6201.JP (Toyota Industries): DENSO sells 0.9% stake in Toyota Industries, signs share forward agreement to sell remaining 8.2% stake

    • -6.1% 004800.KS (HYOSUNG): honorary chairman Cho Suck-rai passed away

• Data:

  • Economic:

    • China

      • March Caixin manufacturing PMI 51.1 vs consensus 51 and 50.9 in prior month

    • Japan

      • BOJ March Tankan large manufacturers business conditions index 11 vs consensus 10 and revised 13 in December

        • March large non-manufacturers business conditions index 34 vs consensus 33 and revised 32 in December

        • FY23 large enterprise capex projection +11.5% vs consensus +9.2% and +13.5% in December

        • 1-year inflation expectations +2.4% y/y vs +2.4% in December

      • March final manufacturing PMI 48.2 vs preliminary 48.2 and 47.2 in prior month

    • South Korea

      • March Trade Balance +$4.3B versus consensus +$4.2B and +$4.3B in prior month

  • Markets:

    • Nikkei: (566.35) or (1.40%) to 39803.09

    • Hang Seng: Closed

    • Shanghai Composite: 36.21 or +1.19% to 3077.38

    • Shenzhen Composite: 41.64 or +2.38% to 1789.25

    • ASX200: Closed

    • KOSPI: 1.23 or +0.04% to 2747.86

    • SENSEX: 375.00 or +0.51% to 74026.35

  • Currencies:

    • $-¥: (0.03) or (0.02%) to 151.3480

    • $-KRW: (2.33) or (0.17%) to 1348.0900

    • A$-$: +0.00 or +0.12% to 0.6525

    • $-INR: +0.01 or +0.01% to 83.3973

    • $-CNY: +0.00 or +0.02% to 7.2290