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StreetAccount Summary - Asian Market Recap: Nikkei (0.40%), Hang Seng (2.84%), Shanghai Composite (1.39%) as of 03:10 ET

Nov 12 ,2024

• Synopsis:

• Asia financial assets sold off notably Tuesday with riskier elements in the region experiencing the brunt of the negative sentiment. Hong Kong's consumer and IT & internet sectors were worst hit as fears grew over ongoing economic weakness, an under whelming fiscal stimulus program to date, and Trump's appointment of China hawks to his cabinet. China-proxy plays also under pressure including Australia's mining stocks. Technology names lower for a second day with TSMC, Hon Hai, Samsung Electronics and SK Hynix among the names building on yesterday's declines.

• Regional bond prices rose to send many sovereign yields to weeks-long lows. Currencies also weaker across the board; Australian dollar and yuan at three-month lows, while the yen held onto yesterday's losses. In other developments, Bloomberg reported China is planning to cut taxes for home buyers to boost the property market while a second report said Beijing would respond to Trump tariffs with more stimulus and a weaker yuan. Elsewhere, Australian consumer and business confidence saw a sharp improvement. Concerns growing that India's economic were appearing in corporate results with half of the blue-chip companies to report so far this quarter have failed to beat estimates.

• Softbank (9984.JP) posted a ¥1.18T ($7.7B) quarterly profit to follow a ¥931B loss in the same quarter last year. A firm linked to activist hedge fund Effissimo Capital Management has taken a 2.5% stake in Nissan Motor (7201.HK), according to the company. Air China (601111.CH) is set to be the first customer of COMAC's C929 widebody aircraft still under development. Maybank (1155.MK) is said to be considering options to boost the value of insurer Etiqa, including buying out Ageas' minority stake. Indian Oil (530965.IN) said a major fire at its Gujarat refinery had been fully extinguished and operations were back to normal levels.

Digest:

• Hang Seng and yuan lead Asia market retreat:

  • Asia stocks sold off sharply Tuesday afternoon, led by Hong Kong's consumer and internet & IT sectors. MSCI Asia Pac-ex Japan index 1.9% lower by Hong Kong's close, Japan's Nikkei down sharply despite bright opening, mainland China indices also paring higher open to close sharply down. Main Hang Seng index (HSI) down more than 4.3% WTD amid growing concerns over lack of new stimulus measures from Beijing, Trump's China-hawks appointees, strong US dollar, ongoing weak economic data. Declines also come just ahead of Alibaba (9988.HK), Tencent (700.HK), JD.com (9618.HK) earnings this week. Pressure also building from yuan at three-month low; follows weakest fixing by PBOC in more than 12 months as markets opened, but offshore yuan accelerated recent weakness. HSI breaking through month-long trading band to downside, now unwound around half of gains made since stimulus plans first announced. China sovereign bond yields also resuming slide to follow month-long pause, 10Y yield back below 2.1%, other regional sovereign yields at weeks-long lows.

• Trump eyes China hawks for National Security Adviser, Secretary of State positions:

  • More signs US-China relations set to become more fraught under next US administration after President-elect Trump selected Florida Representative Mike Waltz as National Security Adviser and reportedly has settled on Florida Senator Marco Rubio as Secretary of State (Bloomberg). Both men considered China hawks with Waltz a member of House China Task Force and having introduced several bills targeting Beijing (Washington Post). He also co-authored an Economist column urging US to pivot from Europe and Middle East to confront "growing threat" from China, including denying Beijing ability to attack Taiwan. Rubio has similarly denounced China in the past, having drawn ire of Beijing when he was sanctioned in 2020 over Hong Kong and Xinjiang and barred from entering country. There have also been conflicting reports in recent days whether Trump asked China tariff architect Robert Lighthizer to reprise his role as USTR (Reuters). Developments seen as indication of US taking more confrontational approach to China across different fronts with Trump having also threatened punitive tariffs on Chinese imports.

• China seen responding to Trump tariffs with more stimulus, weaker yuan:

  • Bloomberg survey (n=19) found strong majority of economists now expect stronger stimulus in response to Trump's reelection with most estimating such measures would limit the Trump administration's negative impact on GDP growth to less than 1 ppt annually over the course of Trump's four-year term. Among proposed measures, near unanimity foresee a higher augmented budget deficit, followed by monetary easing and additional housing support. Notably, 10 out of 19 said Beijing may weaken the yuan, though the estimated magnitude varied widely between 7.3 per dollar to 8 for 2025 amid thoughts the response would depend on the size of tariffs on Chinese imports. In contrast, some argued the priority is on currency stabilization rather than competitive devaluation given capital outflow implications. China's tariff retaliation on US imports seen largely confined to agricultural products, such as soybeans, beef, corn and autos. Article recalled China often targeted US Midwest and Southern regions with reciprocal tariffs during Trump's first term. Some also saw the possibility that Beijing could restrict exports of rare earths and EV batteries.

• China plans to lower homebuying taxes in latest fiscal stimulus effort:

  • Bloomberg citing people with knowledge reported China is planning to cut homebuying taxes in latest fiscal stimulus push. Regulators working on proposal that will allow top-tier cities including Shanghai and Beijing to cut deed tax for buyers to as low as 1% from current 3% with local authorities having flexibility to tweak rules. Plan was hinted by Finance Minister Lan Fo'an last Friday, indicating authorities' increased willingness to use fiscal measures to boost economy along with monetary easing. Top-tier cities also expected to be allowed to drop distinction between ordinary and luxury homes, which would significantly lower costs for people seeking home upgrades and was first flagged following Third Plenum in July. Article noted plan is set to rekindle investors' sentiments for more forceful stimulus to boost domestic demand and combat deflation after last week's NPC Standing Committee meeting fell short of expectations.

• PBOC Governor Pan maintains dovish stance in remarks to NPC, warns against yuan overshoot:

  • Xinhua cited expanded comments from PBOC Governor Pan at last week's NPC Standing Committee session, reiterating commitment to intensify counter-cyclical adjustments, adhering to a "supportive monetary policy, intensify and improve the precision of monetary policy regulation, effectively implement existing policies, and make greater efforts to materialize incremental policies." Noted the need to maintain adequate liquidity and lower financing costs for companies and households. Pledged efforts to ensure that monetary and financial policies form synergy with fiscal, industrial and employment policies, adding China will "resolutely guard against the risk of exchange rate overshooting and keep the RMB exchange rate basically stable at an appropriate and balanced level." Other remarks included a vow to strengthen financial supervision, while reaffirming goals of yuan internationalization and promoting development of Hong Kong and Shanghai as international financial centers. Priority also remains on risk prevention. Rhetoric expanded on a PBOC statement published last week (Reuters).

• Notable Gainers:

  • +12.8% 7201.JP (Nissan Motor): activist Effissimo affiliated Santerra (Cayman) discloses 2.5% stake in company

  • +3.8% 6098.JP (Recruit): reports Q2 revenue and adjusted EBITDA ahead of FactSet estimates; raises FY guidance

  • +2.8% 4021.JP (Nissan Chemical): reports H1 revenue and operating income ahead of guidance; raises FY operating income guidance

  • +1.5% 010130.KS (Korea Zinc Co.): reports Q3 results with revenue ahead of FactSet estimates

  • +1.1% 8354.JP (Fukuoka Financial Group): reports H1 results and raises FY guidance

• Notable Decliners:

  • -14.3% 6728.JP (ULVAC, Inc.): reports Q1 results below FactSet estimates; confirms FY guiance

  • -10% 5871.TT (Chailease Holding): reports Q3 results below FactSet estimates

  • -8.7% 4922.JP (KOSE Corp): reports 9M results; lowers FY guidance; discloses 2030 targets as part of medium-to-long-term vision

  • -7.5% 192820.KS (COSMAX): Q3 results with net income attributable below FactSet estimates

Data:

• Economic:

  • Australia

    • November Westpac-MI consumer sentiment index 94.6 vs 89.8 in October

    • October NAB business confidence +5 vs (2) in September

      • Business conditions +7 vs +7 in September

• Markets:

  • Nikkei: (157.23) or (0.40%) to 39376.09

  • Hang Seng: (580.05) or (2.84%) to 19846.88

  • Shanghai Composite: (48.10) or (1.39%) to 3421.97

  • Shenzhen Composite: (17.25) or (0.81%) to 2116.33

  • ASX200: (10.60) or (0.13%) to 8255.60

  • KOSPI: (49.09) or (1.94%) to 2482.57

  • SENSEX: (539.89) or (0.68%) to 78956.26

• Currencies:

  • $-¥: +0.04 or +0.03% to 153.7560

  • $-KRW: +5.11 or +0.36% to 1406.4600

  • A$-$: (0.00) or (0.38%) to 0.6550

  • $-INR: +0.01 or +0.01% to 84.4087

  • $-CNY: +0.02 or +0.25% to 7.2320