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StreetAccount Summary - Asian Market Recap: Nikkei (0.10%), Hang Seng +2.50%, Shanghai Composite 0.00% as of 04:10 ET

May 02 ,2024

• Synopsis:

  • Asia equities ended mixed Thursday. Another strong day in Hong Kong despite some worries over the rally's sustainability, and despite weakness in large-cap oil stocks. Small gains in Australia and India. Japan rallied through the day to close just under the flatline. South Korea and Taiwan lower, most of Southeast Asia down including a steep fall in Jakarta. Mainland China markets closed for a holiday. US futures higher although now off their peaks, Europe opened with modest losses. US dollar at overnight lows, yen volatile post possible overnight intervention; AUD stronger and yuan at six-week high. Treasury and JGB yields higher across tenors. Crude oil higher in Asia to recover some overnight losses. Precious metals mixed, industrial metals led by strong rally in iron ore. Cryptocurrencies under pressure.

  • Asia equities responded to the overnight Fed commentary on rates with mixed results. Technology-sensitive bourses fell again despite a modest weakening of the dollar, and Japan fell sharply once again at the open before staging a rally. Hong Kong, reacting to its own catalysts, rose sharply again in the morning session before it plateaued. South Korea brushed off promises of won support as well as details of its "Value-up" program to finish lower. The yen still in the spotlight following a second likely intervention by Tokyo overnight in New York; it weakened slightly today and remains volatile.

  • BOJ minutes for March's meeting confirmed confidence in the outlook for wage/price dynamics, and a clear preference for policy normalization and an eventual reduction in JGB purchases. South Korea CPI dipped slightly as core inflation eased to the lowest since December 2021. Asia ex PMIs were steady with India expanding notably again, Taiwan returning to expansion and South Korea's recent contraction stabilizing; the ASEAN region expanded again although growth was far from uniform. Australia's trade surplus was below consensus while building approvals were softer than expected.

  • Mitsubishi Corp (8058.JP) CEO said weak yen is hurting Japan's economy and poses a risk to overseas deals. NIO (9866.HK) said it had delivered more than 15K cars in April, more than double than the total in the same month last year. Standard Chartered (2888.HK) said trading in credit and commodities markets helped it beat Q1 earnings forecasts. SK Hynix (000660.KS) said high-bandwidth memory (HMB) chips are sold out for this year, and almost sold out for 2025. Olam Agri (VC2.SP) made an off-market offer to buy Namoi (NAM.AU) at a slightly higher price than offered by Louis Dreyfus.

• Digest:

  • Yen spike prompts suspicions of another round of FX intervention:

    • Yen volatility again attracted attention overnight, prompted by a brief spike in yen to 153 per dollar from the mid-157 range in the space of about an hour (Nikkei). Market suspected another round of FX intervention though FX policy chief Kanda again declined to confirm. However, signals blurred by mixed reactions to the FOMC meeting and Powell's press conference that triggered notable volatility in equities. With intervention seemingly repeated, Nikkei yesterday discussed the scope and sustainability angles. Money market estimates suggested the possibility of some JPY5T deployed in Monday's widely expected operation, close to the record JPY5.6T used on 12-Oct-22. Commonly cited is Japan's $1.29T in FX reserves, though analysts noted the portion of tradeable assets total only about $300B (JPY47T) and some see an upward limit of around $193B (JPY30T) that could conceivably be used for intervention, leading to a general consensus that MOF had about eight rounds in the chamber. Story further noted timing of intervention operations outside of the Tokyo session when liquidity is relatively thin, which could reflect MOF aims to maximize impact, but also justification for curbing volatility.

  • BOJ March MPM minutes reinforce confidence in inflation, wage outlook:

    • Minutes for the March MPM elaborated on the Summary of Opinions, indicating board members attained sufficient confidence in the outlook for wage/price dynamics following the strong shunto wage hikes, clearing the path for terminating NIRP and YCC. Most members also saw limited risk of market disruptions in moving ahead. Some caution expressed by a couple of dissenters which the policy statement already revealed to be Toyoaki Nakamura who preferred to wait for more information, and Asahi Noguchi who opposed a simultaneous removal of NIRP/YCC and explained in a recent speech. In contrast, a more hawkish view pushed for deliberate and steady normalization in response to economic activity and prices. Still, gradual approach was emphasized throughout, stressing the proposed changes only remove some accommodation and does not mark the start of a rapid rate hike cycle. Extensive discussions also included a staff update on the broad review of unconventional easing and adverse impacts on liquidity auguring for careful transition towards normalization. Government attendees requested a brief adjournment (which was not reported in the media), though accepted the policy changes as remaining consistent with the ongoing goal to achieve stable 2% inflation.

  • South Korea details 'Value-up' program aimed at growing shareholder value:

    • South Korea's Financial Services Commission Thursday published guidelines for companies enrolled in government's "Corporate Value-up Program" intended to tackle low valuations that has led to "Korea discount". Similar program in Japan largely believed to be one of principal drivers behind 12-month long rally on Nikkei and Topix. Program is non-binding with critics arguing government needs to provide stronger incentives for companies to increase value by dismantling cross shareholder ownership, increase dividends. Family-owned chaebols seen as target of plan given outsized ownership of large conglomerates (Bloomberg). Companies responsible for filing own plans to FSC after final guidelines published by end of month. Plan launched in February, attracting large-scale foreign inflows, but stalled in April following victory for opposition party in parliamentary elections; legal experts say parts of plan require legislation that may be hard to pass with left-of center control of legislature.

  • South Korea inflation softens, Finance Ministry vows bold measures to counter won volatilty:

    • Headline CPI rose 2.9% y/y in April compared to consensus 3.0% and follows 3.1% in the previous month. Ex-food & energy inflation also eased to 2.3% from 2.4%, marking the lowest since December 2021. Services inflation edged down to 2.2% from 2.3%. Most of the attention went to elevated fresh food prices up 19.1%,reflecting insufficient harvests as well as higher oil prices (Yonhap). Signs of moderation apt to fan BOK rate cut speculation, though implications for this month's policy meeting were benign (Bloomberg). Immediate attention on won weakness which stands to feed into inflation. In the wake of the FOMC meeting, Finance Ministry held an emergency meeting on macroeconomic developments, recognizing high uncertainties on rate cut prospects among major economies as well as the possibility of greater market volatility due to the Middle East situation. Vowed "bold market stabilization measures against excessive volatility." (Yonhap).

  • Asia ex PMIs show steady manufacturing output in April:

    • Asia April PMIs showed an overall steadying picture as Taiwan returned to expansion, South Korea steadied following March's contraction, and ASEAN continued to expand. South Korea PMI fell to 49.4 from 49.8 but output and new orders returned to expansion. On the downside, employment dipped and there were signs of rising inflationary pressures. Taiwan's PMI returned to expansionary 50.2 from 49.3 following several months of contraction as output and domestic new orders again rose while input costs and new export orders weighed. ASEAN grew at slower pace versus March at 51.0 from 51.5 while individual country performance was mixed. Malaysia shrank for 20th consecutive month but exports improved for first time in 12 months. Indonesia continued to expand but at a slower pace, while Thailand's factory output contracted once again. Vietnam and Philippines both returned to expansion.

  • Notable Gainers:

    • +20.6% 9866.HK (NIO Inc): delivers 15,620 vehicles in April, +134.6% y/y

    • +12.5% NAM.AU (Namoi Cotton): Olam Agri makes off-market takeover offer to acquire Namoi at A$0.66 cash per share

    • +8.2% 9868.HK (XPeng, Inc.): delivers 9,393 vehicles in April, +33% y/y

    • +6.7% 2888.HK (Standard Chartered): reports Q1 underlying EPS $0.53 vs FactSet $0.37

    • +6.2% 383220.KS (F&F Co.): reports Q1 operating profit KRW130.21B vs FactSet KRW140.01B, revenue KRW507.03B vs FactSet KRW513.66B

    • +5.0% 2282.HK (MGM China Holdings): reports Q1 adjusted EBITDA HK$2.50B, +77% vs year-ago HK$1.41B

    • +1.2% D05.SP (DBS Group Holdings): reports Q1 net interest income SG$3.51B vs StreetAccount SG$3.39B, net interest margin 2.14% vs StreetAccount 2.12%

  • Notable Decliners:

    • -26.5% 6169.HK (China YuHua Education): reports H1 adjusted net income CNY229.6M vs year-ago CNY483.5M

    • -12.3% 4062.JP (IBIDEN Co.): reports FY revenue ¥370.51B vs FactSet ¥373.02B, operating income ¥47.57B vs FactSet ¥48.18B

    • -3.5% 008770.KS (HOTEL SHILLA Co.): reports Q1 revenue KRW980.83B vs StreetAccount KRW1.003T

    • -3.4% 2308.TT (Delta Electronics): reports Q1 EPS NT$2.22 vs FactSet NT$2.49

    • -2.7% 500247.IN (Kotak Mahindra Bank): joint managing director Krishnan Venkat Subramanian resigns to pursue other opportunities, effective immediately

• Data:

  • Economic:

    • South Korea

      • April CPI +2.9% y/y vs consensus +3.0% and +3.1% in prior month

        • CPI ex-food & energy +2.3% y/y vs revised +2.4% in prior month

      • April manufacturing PMI 49.4 vs 49.8 in prior month

    • Australia

      • March trade balance A$5.02B vs consensus A$7.30B and revised A$6.59B in prior month

        • Exports +0.1% y/y vs revised (3.2%) in prior month

        • Imports +4.2% y/y vs revised +4.4% in prior month

      • March building approvals +1.9% m/m vs consensus +3.4% and revised (0.9%) in prior month

    • New Zealand

      • March Building Permits m/m (0.2%) versus +16% in prior month

    • Japan April

      • Consumer confidence index 38.3 vs consensus 39.8 and 39.5 in prior month

  • Markets:

    • Nikkei: (37.98) or (0.10%) to 38236.07

    • Hang Seng: 444.10 or +2.50% to 18207.13

    • Shanghai Composite: Closed

    • Shenzhen Composite: Closed

    • ASX200: 17.10 or +0.23% to 7587.00

    • KOSPI: (8.41) or (0.31%) to 2683.65

    • SENSEX: 294.65 or +0.40% to 74777.43

  • Currencies:

    • $-¥: +0.97 or +0.63% to 155.5140

    • $-KRW: (3.19) or (0.23%) to 1374.9100

    • A$-$: +0.00 or +0.29% to 0.6543

    • $-INR: +0.04 or +0.05% to 83.4541

    • $-CNY: (0.00) or (0.02%) to 7.2395