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StreetAccount Summary - Asian Market Recap: Nikkei +1.24%, Hang Seng +0.09%, Shanghai Composite (0.26%) as of 04:10 ET

Apr 30 ,2024

• Synopsis:

  • Asia equities ended mostly higher Tuesday. Japan's Topix saw the best of the region's gains followed by Nikkei; solid advances in Australia, India and Singapore. Greater China struggled for direction following recent strong run as mainland indices fell but Hong Kong gained for a seventh consecutive day. India higher, Southeast Asia saw gains including a strong day in Jakarta. US futures currently lower, Europe opened slightly down. US dollar higher, mainly at expense of the AUD post weak retail data; yen and yuan also weakened. Treasury yields mostly higher, JGB yields down across tenors. Crude flat, gold and industrial metals softer. Cryptocurrencies also down.

  • Asia equities eased higher again Tuesday although buyers' conviction was notably lower on the final day of a relatively strong month for the region. Japan's BOJ and yen volatility remained in sharp focus as authorities declined to admit to an intervention while skepticism grew over whether yen support will work over the long run as long as yield differentials remain as wide as they are.

  • China begins its Golden Week holidays with a mixed session with some evidence of profit taking in an otherwise solid month for equities, especially in Hong Kong. Transport ministry projected travel numbers to surpass 2023 and pre-Covid 2019 levels but economists still left with mixed economic picture following mixed set of PMI data for April. Readings leaned to the expansive side but also saw some slowdown in nonmanufacturing as service growth slowed. Australia retail sales unexpectedly fell amid ongoing cost of living pressures. South Korea industrial production posted its largest drop in 15 months. Japan industrial production marginally beat forecasts while retail sales lagged; unemployment remained steady.

  • Fantasia (1777.HK) said it had agreed with a group of ad hoc bondholders a debt restructuring plan that will involve new det and equities. HSBC (5.HK) said its CEO Noel Quinn would retire but would likely stay in his post until the end of its 12-month notice period. L'Occitane's (973.HK) received a formal privatization offer from its chairman; stock sharply higher. Samsung Electronics (005930.KS) revealed its highest quarterly operating profit in two years after its semiconductor unit returned to profit; company gave a strong outlook statement. Taeyoung Engineering & Construction (009410.KS) faces a creditor vote Tuesday on whether to allow it to begin to restructure its debt; shares remain suspended.

• Digest:

  • China will hold key party gathering focusing on economic reform in July:

    • Chinese Communist Party's central committee will convene in July for long-delayed "third plenum" in July,which will be closely watched for signs of long-term reforms to China's economy (Bloomberg). Xinhua added gathering will discuss comprehensively deepening reforms and pushing forward "Chinese-style" modernization without mentioning exact dates of the meeting. Noted "third plenum" seen as one of the most important events in China's political calendar, convening around 400 top policymakers and typically comes in October or November. Markets will scrutinize signs of major policy while Beijing trying to stabilize economy. At Tuesday's Politburo meeting, usually held at the end of each month, Chinese leaders reiterated country will implement prudent monetary policy and proactive fiscal policy. Added will flexibly use RRR and interest rates tools to support economy while frontloading and make good use of ultra-long bonds. Will study new measures to "digest existing homes" and cut debt burden in debt-laden provinces.

  • China official nonmanufacturing PMI softer than expected, Caixin manufacturing index firmer:

    • Official manufacturing PMI was 50.4 in April, compared to consensus 50.3. Follows 50.8 in the previous month and marks the second month in expansion territory. New orders and exports logged slower growth, overshadowing firmer momentum in output. Inflation metrics strengthened with notable acceleration in input prices, translating to small declines in output prices. Finished goods inventories and employment extended declines. Softer momentum driven by large enterprises as medium and small firms were steady in slight expansion territory. Main surprise came in nonmanufacturing PMI at 51.2 vs consensus 52.3 and 53.0 in March. New orders fell at a faster pace. Headline drag came entirely from stall in services as construction remained steady. Composite PMI fell to 51.7 from 52.7 in March though remains at the highest level since September. NBS noted nothing specific in terms of underlying factors, particularly on the softer services reading. Highlighted bulk of sectors remain in expansion, despite ongoing weakness in finance and real estate. Construction activity buttressed by infrastructure. In contrast, Caixin manufacturing PMI was 51.4, above consensus 51.0 following 51.1 in the prior month as new orders expanded at the fastest pace in over a year.

  • Markets remain bearish on yen despite suspected FX intervention:

    • Press takeaways since yesterday's major swings in yen widely reaffirmed expectations the depreciation trend would continue. Immediate attention on confirmation of FX intervention from MOF, though FX policy chief Kanda declined to comment while reinforcing heightened concerns that recent moves have been excessive and driven by speculators (Kyodo). Added that irrespective of whether there was intervention, authorities have prepared to respond "24 hours a day, 365 days (a year)." FX analysts described any action as a drop in the ocean and impact seen short-lived in the face of entrenched underlying dynamics (dovish BOJ vs hawkish Fed). Some thoughts that Monday presented an opportune timing for intervention given relatively light activity over the Japan long weekend. Bloomberg cited FX market views that repeated intervention would be required to stem the depreciation trend, and some see the possibility of yen returning to 160 per dollar. US factors have been widely cited as the main driver as attention turns to this week's FOMC and employment data.

  • Japan industrial production beats, retail sales disappoint, jobless rate unexpectedly steady:

    • Industrial production rose 3.8% m/m March, above consensus 3.3%. Follows 0.6% decline in the previous month, marking the first rise in three months. Still, Q1 aggregate fell a sharp 5.4% q/q, mostly attributed to temporary auto output suspensions amid certification scandals. Near-term outlook positive with METI survey projections pointing to further growth of 4.1% in April and 4.4% in May. At face value, implies Q2 on track to at least fully recover the Q1 decline, though negative adjusted April projection points to a relatively moderate bounce. Retail sales fell 1.2% m/m in March, softer than expectations of a 0.2% decline. Follows 1.7% rise in February and marks the first bounce in three months. Main drivers were machinery & equipment, apparel, general merchandise and others (including drugs and cosmetics), outweighing growth in autos and fuel. Q1 aggerate was flat on the quarter following a 0.9% q/q decline in Q4. Unemployment rate was steady at 2.6% in March vs consensus 2.5%. Sequential decline in labor force offset by lower employment. Job offers to applicants ratio was 1.28 in March vs consensus and prior month's 1.26 albeit driven by relatively sharp decrease in applications.

  • Australia retail sales unexpectedly decline amid cost of living pressures:

    • Retail sales fell 0.4% m/m in March, contrasting with expectations of a 0.2% rise, following 0.2% growth in the previous month. ABS attributed weakness to cost of living pressures remaining high. All sub-sectors logged declines except for food. Weakness led by notable decreases apparel and department stores as the former fell back after Taylor Swift effects boosted demand in the prior month. Anecdotal responses indicated ongoing caution towards discretionary spending. Headline effects prompted some dovish market reactions (Bloomberg) with Australia contending with RBA policy outlook uncertainties similar to the Fed. RBA rate cut expectations also retreated in the wake of higher-than-expected Q1 inflation with some seeing the possibility of the next move being a rate hike. Bloomberg noted consensus looks for RBA to remain on hold at the May meeting with some views the board will reinstate a tightening bias as labor market remains tight. Separately, Coles (COL.AU) reported generally positive Jan-Mar sales growth in a positive signal for non-discretionary demand.

  • Notable Gainers:

    • +15.9% 6503.JP (Mitsubishi Electric): reports Q4 revenue ¥1.476T vs StreetAccount ¥1.386; guides FY ending Mar-25 operating profit ¥400.0B vs FactSet ¥356.26B

    • +11.5% 6301.JP (Komatsu): reports Q4 revenue ¥1.070T vs StreetAccount ¥1.018; to launch up-to-¥100B on-market buyback from 30-Apr to 30-Sep

    • +9.3% 973.HK (L'Occitane International): receives HK$34/share privatization offer from chairman Reinold Geiger

    • +8.7% 090430.KS (Amorepacific): reports Q1 operating profit KRW72.68B vs StreetAccount KRW51.47B

    • +8.5% 6501.JP (Hitachi): reports Q4 adjusted operating income ¥230.1B vs FactSet ¥228.71B; to launch up-to-¥200.0B buyback from 30-Apr to 31-Mar-25; to conduct 5-for-1 stock split, effective 1-Jul

    • +6.3% 8053.JP (Sumitomo): reportedly Elliott Management builds stake in Sumitomo

    • +2.1% 5.HK (HSBC Holdings): reports Q1 EPS ex-items $0.34 vs FactSet $0.25; intends to initiate up-to-$3B share buyback; CEO Noel Quinn has informed board of his intention to retire

    • +1.0% 005930.KS (Samsung Electronics): reports Q1 operating profit KRW6.606T vs guidance KRW 6.600T

  • Notable Decliners:

    • -9.9% 2413.JP (M3): reports FY revenue ¥238.88B vs FactSet ¥240.44B, operating income ¥64.98B vs FactSet ¥72.29B

    • -7.3% 6857.JP (Advantest): reports Q4 operating income ¥19.5B vs StreetAccount ¥25.25B; guides FY ending Mar-25 operating income ¥90.00B vs FactSet ¥135.91B

    • -7.1% 361610.KS (Sk Ie Technology Co.): reports Q1 operating profit (KRW67.40B) vs StreetAccount KRW1.70B, revenue KRW46.15B vs StreetAccount KRW146.98B

    • -6.3% 4661.JP (Oriental Land Co.): reports FY revenue ¥618.49B vs FactSet ¥619.69B, operating profit ¥165.44B vs FactSet ¥170.36

    • -2.0% 603259.CH (WuXi AppTec): reports Q1 CAS revenue CNY7.98B vs FactSet CNY8.40B

• Data:

  • Economic:

    • China April

      • Official manufacturing PMI 50.4 vs consensus 50.3 and 50.8 in prior month

        • Non-manufacturing PMI 51.2 vs consensus 52.3 and 53.0 in prior month

        • Composite PMI 51.7 vs 52.7 in prior month

      • Caixin manufacturing PMI 51.4 vs consensus 51.0 and 51.1 in prior month

    • Japan March

      • Unemployment rate 2.6% vs consensus 2.5% and 2.6% in prior month

        • Job offers to applicants ratio 1.28 vs consensus 1.26 vs 1.26 in prior month

      • Industrial production +3.8% m/m vs consensus +3.3% and (0.6%) in prior month

        • METI survey projections +4.1% in April, +4.4% in May

      • Retail sales (1.2%) m/m vs consensus (0.2%) and revised +1.7% in prior month

        • Retail sales +1.2% y/y vs consensus +2.4% and revised +4.7% in prior month

      • Housing starts (12.8%) y/y vs consensus (7.6%) and (8.2%) in prior month

        • Annualized starts 760K sa vs 795K in prior month

    • South Korea March

      • Industrial production (3.2%) m/m vs consensus +0.5% and revised +2.9% in prior month

        • Industrial production +0.7% y/y vs consensus +4.6% and revised +4.6% in prior month

    • Australia March

      • Retail sales (0.4%) m/m vs consensus +0.2% and revised +0.2% in prior month

    • New Zealand April

      • ANZ Business Confidence +14.9% versus +22.9% in prior month

  • Markets:

    • Nikkei: 470.90 or +1.24% to 38405.66

    • Hang Seng: 16.12 or +0.09% to 17763.03

    • Shanghai Composite: (8.22) or (0.26%) to 3104.82

    • Shenzhen Composite: (12.36) or (0.70%) to 1756.08

    • ASX200: 26.70 or +0.35% to 7664.10

    • KOSPI: 4.62 or +0.17% to 2692.06

    • SENSEX: 239.64 or +0.32% to 74910.92

  • Currencies:

    • $-¥: +0.55 or +0.35% to 156.8870

    • $-KRW: +6.50 or +0.47% to 1381.8900

    • A$-$: (0.00) or (0.61%) to 0.6526

    • $-INR: (0.04) or (0.05%) to 83.4979

    • $-CNY: (0.00) or (0.00%) to 7.2388