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StreetAccount Summary - Asian Market Recap: Nikkei +1.08%, Hang Seng +0.57%, Shanghai Composite +0.05% as of 04:10 ET

Apr 09 ,2024

• Synopsis:

  • Asian equities ended mostly higher Tuesday. Strongest gains on Taiex that surged almost 2%. Solid gains elsewhere including Hong Kong, Singapore, Japan, and India which saw the Sensex briefly surpass 75K before falling back. South Korea the only major board to see losses. Southeast Asia mainly higher, Jakarta and Manila closed for a holiday. US futures turning negative, Europe opened sharply lower. US dollar flat, most Asia currencies also unchanged, although yen moving point by point closer to 152 per dollar. Treasury yields mixed. Precious metals higher, industrial metals led by strong gains in iron ore on hopes of a demand recovery next month.

  • A minor risk-on session in Asia Tuesday as technology stocks outperformed and optimism returned to China's markets following yesterday's directionless day. Benchmarks led by Taiwan's Taiex, which surged to new record high as TSMC gained almost 5% on reports it was to receive $6.6B in grants from the US government to expand a semiconductor factory. South Korea's Kospi underperformed on reports of a large block sale at Samsung, and a day ahead of parliamentary elections.

  • Focus still firmly on Japan authorities to gauge reaction on yen movements, as it slowly approaches the 152 per dollar level; plenty of BOJ and finance ministry commentary today, none of which had any lasting impact on the currency, but 152 still seen as a red line for authorities. Ahead, US CPI data Wednesday plus a string of Asia central bank meetings later in the week. Few if any rate changes expected by any regional monetary authorities but accompanying statements will be read carefully for hints of any potential rate cuts ahead of the Fed.

  • In macro news, Australian consumer pessimism deepened amid high interest rates and sticky inflation, while business confidence held around neutral. The New Zealand quarterly business survey showed marked deterioration in confidence and trading activity. Japan machine tool orders fell 8.5% y/y but consumer morale at its highest in five years.

  • Private equity group Blackstone is nearing a deal to take L'Occitane (973.HK) private, according to reports; stock was suspended prior to market trading. HSBC (5.HK) is to sell its Argentina unit for $500M but also book a $1B pretax loss. NetEase (9999.hk) is to handle the return of Blizzard Entertainments servers to China, according to local media reports. Around 5.25M shares in Samsung Electronics (005930.KS) were sold in a block sale worth KRW 441B ($326M), reportedly seller was chairman's sister and could be used to pay inheritance tax. TSMC (2330.TT) is to receive more than $6B in subsidies and $5B in loans from the US government to expand its Texas chip plant.

• Digest:

  • BOJ JGB purchase operations still closely monitored; Ueda reaffirms policy to remain accommodative for now:

    • Nikkei discussed the BOJ's JGB purchase operation Monday, noting the steady size defied market speculation of a reduction in the wake of the March MPM decisions, reaffirming the board's message that financial conditions would remain accommodative. Article added the backdrop of short yen positions, noting CFTC net speculative shorts amounting to JPY1.79T as of 2-Apr was the second largest since the advent of unconventional easing in 2013. Coincides with yen's recent decline to a 34-year low versus dollar. BOJ bought JPY475B in 10-year JGBs Monday, the same pace as in March, surprising some views that purchases would adjust to a JPY100B decline in new 10y JGB issuance, which should translate to a reduction of JPY25B per operation. Story noted markets are watchful of any curtailment of purchases below the JPY5.5T monthly pace of redemptions, which would be interpreted as QT. Separately, Governor Ueda told parliament that policy will remain accommodative for the time being as the inflation target has not been reached, though BOJ projections point to a stage when paring stimulus must be considered (Reuters). However, Ueda added he had no preset idea in mind on when and how the BOJ will next adjust short-term interest rates.

  • China economic policy discussions still see recovery, no calls for stronger stimulus:

    • Xinhua reported Premier Li Qiang held a symposium Monday with economic experts and business leaders to solicit opinions on the current state of the economy and the work for the next step. Consensus was that despite a complex external environment and lingering difficulties and challenges, the Chinese economy has continued to pick up with growing positive factors and bolstered market confidence. Li stressed it is imperative to intensify efforts to expedite implementation of government policies, further stimulating market entities, bolstering endogenous momentum, and tackling prominent problems systematically. Urged targeted measures should be rolled out to leverage technological innovation for driving industrial innovation and address the shortages in effective demand. Separate Xinhua discussion reviewed China's economic policies to date, highlighting the improvement in Jan-Feb activity data as validation of the current policy mix. For this year, noted widespread attention on the CNY1T ($141B) issuance of ultra-long special treasury bonds with fiscal support combining with ongoing tax breaks. Cited PBOC Governor Pan's recent remarks noting there is still room for further RRR cuts.

  • Australian consumers deeply pessimistic, but business conditions remain positive:

    • Australian Westpac-MI consumer sentiment index fell to 82.4 in April from 84.4 in March, near record low and consistent with entrenched pessimism as households struggle against high interest rates and cost of living. Survey showed sharp fall in respondents' medium-to-long term economic outlook while 'time to buy a major item' index fell back to extreme lows. NAB business sentiment index inched up to +1 in March from 0 in February, aided by slight lift in retail and construction sector confidence. Conditions fell to +9 from +10, still above average levels. Sub-gauges mixed with trading activity strong but profitability slipping. Forward orders improved but remain in negative territory while continued fall in capacity utilization indicative of supply and demand moving into better balance. Pricing pressures appeared to ease with labor and purchase cost growth slowing alongside final selling prices, though pace of decline consistent with expectations of only gradual fall in inflation.

  • New Zealand firms gloomier on economic outlook as high interest rates depress demand:

    • Closely watched NZIER Quarterly Survey of Business Opinion (QSBO) showed marked deterioration in firms' business confidence and trading activity. Net 24% of firms anticipate weaker economy over coming months compared to net 10% from December survey. Net 23% of firms reported decline in own trading activity, a turnaround from net 7% that reported increase in activity in prior quarter. Building sector most downbeat (net 54%) amid cost headwinds and reduced pricing power. Retailers also pessimistic amid household cost of living pressures. High interest rates working to depress demand, though also putting downward pressure on costs and prices, underlining expectation CPI inflation will fall to RBNZ's 1-3% target in H2 2024. Data adds to signs New Zealand's economy remains weak after unexpectedly entering recession in late 2023, prompting thoughts RBNZ may relax its restrictive policy stance at Wednesday's meeting.

  • StreetAccount Event Preview: RBNZ 10-Apr policy meeting

    • RBNZ widely expected to leave OCR unchanged at 5.50% at its 10-Apr policy meeting. Most of the interest will be on guidance and whether central bank sticks with its view rates will need to stay restrictive for some time. Recent run of data (including today's QSBO) suggests high interest rates continue to dampen demand after economy entered recession in late 2023. Business surveys also signaling inflation pressures easing as supply and demand move back into better balance. RBNZ likely to acknowledge weak economic backdrop, but previews do not expect any meaningful shift to a more neutral-dovish bias given inflation focus and that statement will not include updated economic forecasts. While RBNZ is not projecting rate cuts until H1 2025, economists and markets anticipate easing cycle beginning in late 2024 with inflation projected to return to 1-3% target later this year.

  • Notable Gainers:

    • +4.6% 2330.TT (Taiwan Semiconductor): US Commerce Department awards Taiwan Semiconductor $6.6B subsidy, $5B loans for Arizona chip plants

    • +4.4% 9999.HK (NetEase): China's NPPA grants licenses for 46 imported games; reportedly to bring back Blizzard games this week

    • +2.7% 916.HK (China Longyuan Power Group): reports March power generation (MWh) 7.8M vs year-ago 6.8M

    • +1.2% 5.HK (HSBC Holdings): to sell HSBC Argentina to Grupo Financiero Galicia for $550M (ARS475.34B)

  • Notable Decliners:

    • -7.9% 1258.HK (China Nonferrous Mining): launches HK$978M placement at HK$6.0/share

    • -6.7% 6963.JP (ROHM Co.): to issue zero coupon convertible bonds due 2029, 2031 for a total of ¥200B, sets conversion prices at ¥3,063, ¥2,943

    • -4.6% 543245.IN (Gland Pharma): holders reportedly to sell stake worth $168M (INR13.99B) via block deal

    • -4% 3141.JP (Welcia Holdings): reports Q4 revenue ¥306.88B vs FactSet ¥311.42B, EBIT ¥12.13B vs FactSet ¥13.84B

    • -1.1% 005930.KS (Samsung Electronics): CEO of Hotel Shilla reportedly sells 5.2M Samsung Electronics shares via block trade to raise funds for inheritance tax payment

    • -0.4% 7453.JP (Ryohin Keikaku): liquidates managing subsidiary in UK as part of reorganization of group with aim of enhancing business and financial base in Europe

    • -0.08% 500570.IN (Tata Motors): JLR reports Q4 retail sales 114,038 units, +11% y/y

• Data:

  • Economic:

    • Australia

      • April Westpac-MI consumer sentiment 82.4 vs 84.4 in March

      • March NAB business confidence +1 vs 0 in February

        • Business conditions +9 vs +10 in February

  • Markets:

    • Nikkei: 426.09 or +1.08% to 39773.13

    • Hang Seng: 95.22 or +0.57% to 16828.07

    • Shanghai Composite: 1.48 or +0.05% to 3048.54

    • Shenzhen Composite: 14.30 or +0.82% to 1750.80

    • ASX200: 35.10 or +0.45% to 7824.20

    • KOSPI: (12.49) or (0.46%) to 2705.16

    • SENSEX: 28.08 or +0.04% to 74770.58

  • Currencies:

    • $-¥: +0.11 or +0.07% to 151.9000

    • $-KRW: (0.13) or (0.01%) to 1354.4900

    • A$-$: (0.00) or (0.01%) to 0.6602

    • $-INR: (0.10) or (0.12%) to 83.2270

    • $-CNY: +0.00 or +0.03% to 7.2331