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StreetAccount Summary - Asian Market Recap: Nikkei +0.18%, Hang Seng +2.76%, Shanghai Composite (0.05%) as of 03:10 ET

Dec 09 ,2024

• Synopsis:

  • Asian equities ended mixed Monday. South Korea sharply lower as political crisis builds. Hang Seng surged on announcement monetary policy would be loosened, which came too late for mainland China boards that fell over the day. Singapore down along with several other Southeast Asia benchmarks. Small gains for Taiwan, India fell on China monetary policy news. Japan and Australia closed near their opening levels. US futures mixed, Europe opened with gains. US dollar inching higher, Asia currencies under pressure notably the won. Treasuries mixed, South Korea sovereign yields lower, JGB yields lower on hawkish BOJ comments. WTI futures higher on Syria developments, Brent steady. Precious metals mixed, base metals led lower by sharp drop in iron ore. Cryptocurrencies lower as bitcoin dips below $100K.

  • Asia stocks opening brightly but came under pressure over the day as investors digested latest events in Syria and South Korea. The former led WTI futures higher while the latter triggered risk off selling in South Korean assets. Political crisis in Seoul likely to continue this week after President Yoon survived an impeachment attempt on Saturday but now faces a prosecutorial investigation into his declaration of martial law last week, and has been ordered not to leave the country.

  • Hong Kong stocks surged late after Beijing loosened monetary policy for the first time since 2011. A politburo statement said it would aim to stabilize the property and stock markets, and take measures to prevent systemic risks. It also said it would be more proactive on fiscal policy to boost consumption "forcefully". In economic developments, China CPI inflation decelerated playing into weak demand narrative but PPI deflation narrowed by more than expected. Japan final Q3 GDP was raised slightly driven by smaller declines in capex and exports. Little market follow through from developments in Syria over the weekend bar a small strengthening in WTI oil prices.

  • Rakuten (4755.JP) said it would offer one-year free mobile plans for shareholders; stock price sharply higher. Chugoku Electric Power (9504.JP) restarted its Shimane nuclear power station in western Japan for the first time since it was shut following the Fukushima accident in 2011.WuXi AppTec (2359.HK) and WuXi Biologics (2269.HK) shares rose sharply after piece of US legislation targeting the firms was left out of a key defense bill. LG Electronics (066570.KS) is to offer 101.8M shares or a 15% stake in its LG Electronics India IPO. Samsung SDI (006400.KS) among the South Korea stocks reassessing its US investment amid a dip in EV sales.

• Digest:

  • China Politburo signals dovish monetary policy shift in first change in stance in 14 years:

    • Xinhua published latest Politburo meeting readout that said China will implement a more proactive fiscal policy and a "more moderately loose" monetary policy next year, which Bloomberg noted is first time since 2011 that China's top leaders shifted their stance on monetary policy from "prudent" as policymakers brace for a second trade war with incoming Trump administration. Noted greater easing in 2025 will likely be welcomed by investors hoping to see more stimulus. Politburo meeting also stressed country will strengthen counter-cyclical policy adjustments and policy coordination. Also says will vigorously boost consumption, improve investment efficiency, and expand domestic demand. Added China will stabilize property and stock market although without giving details. Noted December's Politburo meeting set agenda for larger Central Economic Work Conference that will likely take place later this week. HSI jumped as much 2.8% after the news, CGB yields and yuan both stable.

  • China inflation data mixed:

    • PPI fell 2.5% y/y in November, better than expectations of a 2.8% decline. Follows 2.9% decrease in the prior month, marking the first relative improvement since June. Headline reflected narrowing weakness in both upstream and downstream sectors. Segments related to fossil fuels and metals notably weak. Still, NBS noted some sequential support for building materials owing to stimulus effects leading to accelerated real estate and infrastructure projects. Final demand sectors weighed down by moderate declines in autos and PCs/electronics. CPI rose 0.2%, below consensus 0.4%. Follows 0.3% in prior month for the softest increase since June. Core inflation edged up to 0.3% from 0.2%. Softer headline mainly reflected smaller increases in food prices, though skewed up by fresh vegetables and pork. Non-food inflation slowed to unchanged. Fuel and household appliances were notably weaker. Goods prices also flat (albeit after a 0.4% slide in October) while services prices rose a steady 0.4%. Overall results remained consistent with the persistent deflation narrative, though latest Caixin manufacturing PMI inflation metrics provided signs that downward pressures starting to ease (Bloomberg).

  • South Korea political crisis deepens as President dodges impeachment:

    • South Korea prosecutors Sunday opened criminal investigation into President Yoon over martial law declaration, deepening political crisis amid large-scale public protests and increasing calls for Yoon to step aside. Yoon survived impeachment attempt Saturday after opposition lawmakers lacked quorum for vote however leader of his own party said Yoon would eventually resign with duties delegated to PM, ruling party in interim (Reuters). National Assembly speaker rejected this plan, said delegation of presidential duties unconstitutional without impeachment (Yonhap). Opposition also rejected proposal, said it would seek special counsel probe over treason charges against Yoon, other officials; added it will reintroduce impeachment motion Wednesday when extraordinary parliamentary session starts (Yonhap). Sunday, prosecutor said it had 'booked' President Yoon on suspicion of treason and abuse of power, kickstarting investigation (Yonhap) while opposition party admitted it had submitted similar complaints against former defense minister, martial law commander accusing them of insurrection. Yoon has also been ordered not to leave South Korea.

  • December BOJ rate hike expectations losing steam as MPM approaches:

    • Nikkei discussed growing expectations of a BOJ rate hike in January rather than December. Discussions continued to revolve around Governor Ueda's recent Nikkei interview, where comments now framed as evoking patience as the Bank monitors US developments. Still, article noted a sharp yen depreciation remains the key swing factor, leaving open the possibility of a December move. Latest OIS-implied rate hike probabilities as of Friday stood at 39% for December and 38% for January, contrasting with a December move ~60% priced in during late-November at its peak. Recalled Ueda's main quote that a rate hike is approaching to the extent that macro data remains on track, though other comments signaling attention on 2025 shunto now apparently resonating. Story cited thoughts Ueda sought to lower market expectations for a December hike. A US fund noted foreign investors pricing in December are a minority. Notably, a BOJ official indicated internal views remain indecisive. BNP Paribas last week pushed back their rate hike call to January from December as the likelihood BOJ will remain on hold in December unless yen sells off. A Barclays note highlighted importance of hearing-based information from the January BOJ branch managers' meeting on service sector wage passthrough.

  • Rebels topple Assad regime in Syria:

    • Rebels from Hayat Tahrir Al-Sham (HTS), a Sunni al Qaeda offshoot, overthrew Bashar Al Assad's regime in Syria, completing a rapid-fire takeover that occurred largely without bloodshed after encountering little resistance from Syrian army (FT, Reuters, Bloomberg). Russia claimed to have given Assad and his family asylum in Moscow. Global leaders cautiously praised Assad's overthrow, though warned risk of instability going forward with HTS also a designated terrorist organization and other groups within Syria potentially vying for power. Israel PM Netanyahu hailed situation while responding with military incursion into Golan Heights buffer zone (Politico). President Biden also ordered airstrikes on several ISIS targets across Syria. From a strategic standpoint, development viewed as setback for Russia and Iran, longtime Assad backers. Turkey, which backed HTS, expected to exert greater influence over Syria. Still, rebel takeover of Syria has been mostly ignored by markets to this point, particularly given no outside involvement and lack of implications for oil.

  • Notable Gainers:

    • +10.0% 3323.HK (China National Building Material): to buy back up to 841.7M shares at HK$4.03/share

    • +9.6% 2269.HK (Wuxi Biologics (Cayman)): US House and Senate's FY25 National Defense Authorization Act agreement did not include Biosecure Act

    • +3.1% 6669.TT (Wiwynn): reports November revenue NT$37.47B, +93.3% y/y

    • +0.4% 8113.JP (Unicharm): to conduct 3-for-1 stock split, effective 1-Jan

  • Notable Decliners:

    • -9.6% 9627.JP (Ain Holdings): reports H1 results with decline in operating profit year-on-year

    • -9.3% 532424.IN (Godrej Consumer Products): guides standalone mid-single digits sales growth

    • -4.8% 006400.KS (Samsung SDI): South Korean battery makers reportedly reassessing US investment

    • -2.2% 066570.KS (LG Electronics): to offer 101.8M-shares representing 15% stake in LG Electronics India IPO

• Data:

  • Economic:

    • China

      • November CPI +0.2% y/y vs consensus +0.4% and +0.3% in prior month

        • PPI (2.5%) y/y vs consensus (2.8%) and (2.9%) in prior month

    • Japan

      • Revised Q3 GDP +1.2% q/q annualized vs consensus +0.9% and preliminary +0.9%

        • GDP +0.3% q/q vs consensus +0.2% and preliminary +0.2%

      • October current account balance ¥2,456.9B vs consensus ¥2,318.0B and ¥1,717.1B in prior month

      • November bank lending +3.0% y/y vs revised +2.6% in prior month

    • Singapore Q3

      • Unemployment Rate (Final) 1.9% versus consensus 1.8% and 1.8% in prior quarter

  • Markets:

    • Nikkei: 69.33 or +0.18% to 39160.50

    • Hang Seng: 548.24 or +2.76% to 20414.09

    • Shanghai Composite: (1.54) or (0.05%) to 3402.53

    • Shenzhen Composite: (7.32) or (0.35%) to 2057.32

    • ASX200: 2.10 or +0.02% to 8423.00

    • KOSPI: (67.58) or (2.78%) to 2360.58

    • SENSEX: (93.09) or (0.11%) to 81616.03

  • Currencies:

    • $-¥: +0.35 or +0.23% to 150.3570

    • $-KRW: +7.55 or +0.53% to 1433.0300

    • A$-$: +0.00 or +0.46% to 0.6419

    • $-INR: +0.04 or +0.04% to 84.7043

    • $-CNY: +0.00 or +0.05% to 7.2744