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StreetAccount Summary - Asian Market Recap: Nikkei +0.30%, Hang Seng (0.92%), Shanghai Composite +0.12% as of 03:10 ET

Dec 05 ,2024

• Synopsis:

  • Asia equities ended mostly higher Thursday. Solid gains for Japan, Australia, mainland China and Singapore, which briefly touched record highs. South Korea saw more losses, the Hang Seng gave up some of its recent gains, but India has pared early losses and is now higher. Southeast Asia was mixed. US futures mixed, European markets marginally lower in opening trades. US dollar losing ground in afternoon trade, yen, AUD and NZD all stronger, yuan flat. Treasury yields higher, CGB yields sank further, South Korean sovereigns stable. Crude oil flat, precious metals lower, base metals mixed. Cryptocurrencies surged on new SEC pick, bitcoin above $100K.

  • Asia markets saw capped gains Thursday as traders balanced enhanced political risk in Europe and Asia, with buoyant global stock markets and risk-on sentiment in cryptocurrencies. High equity benchmarks across multiple regions appear to be at odds with short-term risk-off mode in bonds and forex markets, which are responding to the French government collapse, the pending no-confidence vote in Germany, and short-lived martial law in South Korea with some caution.

  • Thursday, South Korea opposition lawmakers moved to impeach President Yoon with a vote scheduled for Saturday although there is considerable doubt it will pass as the ruling party said it will vote against it. BOK Governor Rhee said he believed market turmoil will pass and won will gradually recover, adding political turmoil won't impact GDP outlook for the country. Elsewhere, BOJ board member Nakamura expressed caution towards economic progress and rate hikes. Singapore retail sales rose the most in five months; Australia exports grew 3.6% m/m in October to take its trade surplus to its biggest in eight months; South Korea Q3 final GDP reading at unchanged 0.1% y/y.

  • Nippon Steel (5401.JP) said it is committed to its $15B acquisition of US Steel and is confident it can close the deal by the end of the year. NCsoft (036570.KS) received a disappointing reception of its latest game 'Journey of Monarch' following its global launch; share sharply lower. Adaro Adalan (AADI.IJ) rose almost 20% in its trading debut in Jakarta in the Indonesia's largest IPO of the year. Bharti Airtel (532454.IN) said it has signed a multi-billion dollar 4G and 5G equipment deal with Ericsson for likely deployment in 2025. Woodside Energy (WDS.AU) has signed a contract with Bechtel to develop a Louisiana LNG project with a final investment decision to be made by Q1-25.

• Digest:

  • President Yoon impeachment vote set for Saturday but passage far from certain:

    • South Korea opposition Democratic Party and five minor partners set President Yoon's impeachment vote for Saturday although outcome uncertain as opposition bloc do not have 200 votes necessary for motion to pass (KoreaHerald). Leader of ruling PP Party (PPP) Han Dong-hoon said he wanted party to block impeachment passage to "prevent harm on people from the chaos" although did not want to defend Yoon's martial law declaration; instead called for Yoon to leave party (Yonhap). PPP members remain divided over crisis with eight needed to back bill for it to pass (Reuters). PPP boycotted session that set impeachment vote Thursday. Separately, President Yoon accepted resignation of defense minister Kim Yong-hyun following reports he proposed martial law declaration and who has since been prohibited from leaving the country (Yonhap). Finance minister Choi said, following meeting with BOK Governor Rhee and market regulators, crisis had "limited" impact on South Korea financial markets but urged "calm and measured response" (Bloomberg, Yonhap). He reiterated government and BOK readiness to stabilize markets amid reports BOK had intervened to support won Wednesday.

  • BOK Governor sees export slowdown, Trump as bigger threats to economy than domestic political events:

    • Bank of Korea governor Rhee said Thursday he is more concerned over slowdown in exports and impact of new US administration on South Korea economy rather than volatility caused by this week's political events. Said expected volatility to gradually ease unless new shocks arise, saw no impact to GDP growth outlook for now and won't change growth forecasts (Yonhap). Added bank can separate political events from economic dynamics but admitted impeachment process an uncertainty for markets. Rhee dismissed chances Wednesday of interest rate cut to buffer impact of 'short-lived' event given solid market fundamentals. BOK seen supporting won post turmoil of Tuesday night but Rhee said expects currency to gradually rise. Won weakened around 1.4% against dollar this week, and lower again Thursday amid political uncertainties, slowing economy. Separately Thursday, BOK confirmed Q3 GDP growth at just 0.1% y/y, versus 2.3% y/y growth in Q2 amid slowing exports, sluggish domestic consumer (Reuters).

  • BOJ's Nakamura cautious on rate hikes, markets reacting more to dovish press reports:

    • In a speech, BOJ board member Nakamura acknowledged some positive economic developments though said he still lacks confidence in the sustainability of wage hikes. Added that it will take some time to attain sufficient confidence in the transmission between corporate profitability and economic growth required to achieve stable 2% inflation. Stressed importance of preventing a stifle of emerging signs of a wage/investment driven economy and advocated for careful policy adjustments commensurate with the state of the economy through analysis of data. Specified an extensive criteria list: small business recovery beyond pre-pandemic levels, improvements in the rate of cost passthrough, progress in capex, compensation growth, proactive small firm wage growth, cessation in household belt-tightening, increase in export competitiveness. Speech was preceded by market reactions to unconfirmed press articles suggesting BOJ may leave rates on hold this month. Bloomberg cited Jiji Press indicating a growing internal BOJ view that a premature rate hike should be avoided unless there is major upside inflation risk on factors such as yen depreciation. BOJ OIS implied rate hike odds dropped to 40% from 66% on 29-Nov. Follows yesterday's local press talk mentioning English language pieces published during the US session guided yen and JGB yields lower.

  • China state media hints country can accept growth rate a little less than 5%:

    • State media Xinhua wrote in a commentary that while officials have made every effort to achieve this year's growth target, coming in "a little to left or right" of that around 5% goal would be "acceptable", which Bloomberg said is an apparent attempt to manage expectations ahead of next week's Central Economic Work Conference (CEWC), in which investors hope to see stronger stimulus for 2025. Xinhua article said Chinese economy needs to get rid of "worship of speed" mindset, which may temporarily lift growth speed but will also be taking overdraft from the future. Meanwhile another Xinhua article highlighted expanding domestic demand as key task given complicated external environment with Trump threatening much higher tariffs on Chinese exports. Bloomberg noted expectations are high for authorities to discuss keeping 2025's growth target in line with this year's at CEWC. Meanwhile Nikkei recapped some viral remarks from two outspoken Chinese economists that warned of inflated growth and "lethargic" youth, seen as departure from official narrative.

  • Australia household spending beats on entertainment demand:

    • Household spending rose 0.8% m/m in October, ahead of consensus 0.3%, rebounding from a 0.2% decline in the previous month. ABS highlighted recreation and culture led broad-based growth across all major categories, attributed to several major international music concerts and sporting events. Strength was followed by apparel, health, hotels & dining. Softest segments were alcohol & tobacco and furnishings/household equipment. Spending also increased in all states and territories, albeit NSW, VIC bounced off notable declines in the prior month. Total goods edged higher for the first time in four months while services were the strongest since Jul-23. Discretionary spending logged the biggest gain since January while non-discretionary spending remained broadly stable. ABS data undergoing transition to enhance household spending while retail sales will be phased out after Jun-25. Early takeaways were positive, taken as an encouraging start to Q4, though had no bearing on Tuesday's RBA meeting, expected to remain on hold.

  • Notable Gainers:

    • +19.2% 4046.JP (OSAKA SODA): holds IR briefing for institutional investors and analysts; reportedly may shorten timeline for second phase of Amagasaki Plant expansion by six months to complete it within this fiscal year

    • +6.3% 1357.HK (Meitu Inc): sells cryptocurrencies, gains $79.6M, plans special dividend of HK$0.109/share

    • +3.5% 1821.HK (ESR Group): to be acquired at HK$13 cash or EquityCo share swap

    • +3.0% 000660.KS (SK Hynix): reportedly promotes director Ahn Hyun to president

    • +1.1% 005930.KS (Samsung Electronics): VP Park Soon-cheol reportedly to succeed Hark Kyu Park as CFO

    • +1.0% 534816.IN (Indus Towers): Vodafone Group to sell 3.0% stake

  • Notable Decliners:

    • -14.3% 036570.KS (NCsoft): disappointing reception of latest game Journey of Monarch after global launch

    • -4.8% 1772.HK (Ganfeng Lithium Group): Daiwa downgrades to underperform from outperform citing lithium ASP risks

• Data:

  • Economic:

    • Australia

      • October trade balance A$5.95B vs consensus $4.55B and revised A$4.53B in September

        • Exports +3.6% m/m vs revised (4.7%) in September

        • Imports +0.1% m/m vs revised (2.8%) in September

      • October household spending +0.8% m/m vs consensus +0.3% and (0.2%) in prior month

        • Household spending +2.8% y/y vs consensus +2.2% and revised +0.9% in prior month

    • South Korea

      • Q3 revised GDP +0.1% q/q vs preliminary +0.1% and (0.2%) in prior quarter

        • GDP +1.5% y/y vs preliminary +1.5% and +2.3% in prior quarter

  • Markets:

    • Nikkei: 119.21 or +0.30% to 39395.60

    • Hang Seng: (182.02) or (0.92%) to 19560.44

    • Shanghai Composite: 4.21 or +0.12% to 3368.86

    • Shenzhen Composite: 14.90 or +0.74% to 2039.31

    • ASX200: 12.30 or +0.15% to 8474.90

    • KOSPI: (22.15) or (0.90%) to 2441.85

    • SENSEX: 535.07 or +0.66% to 81491.40

  • Currencies:

    • $-¥: (0.81) or (0.54%) to 149.8110

    • $-KRW: (1.97) or (0.14%) to 1411.3800

    • A$-$: +0.00 or +0.20% to 0.6445

    • $-INR: +0.03 or +0.04% to 84.7223

    • $-CNY: +0.00 or +0.01% to 7.2648