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StreetAccount Summary - Asian Market Recap: Nikkei +0.53%, Hang Seng (0.50%), Shanghai Composite +0.59% as of 03:10 ET

Dec 10 ,2024

• Synopsis:

  • Asia stocks ended mixed Tuesday. Hong Kong gapped higher by around 2% but finished lower, mainland China markets remained positive but off their peaks. Markets in Japan and Singapore higher, South Korea led the gainers. Australia and Taiwan with losses along with most of Southeast Asia. US futures flat, Europe slightly weaker at the open. US dollar flat, AUD weaker following RBA decision, yuan noticeably stronger, rupee at record low on RBI governor change. Treasury yields higher, Australia yields at almost two-month low, CGBs at fresh record lows. Crude futures lower, precious metals mixed, industrial metals down led by iron ore on weak China import data.

  • Asia markets without a firm direction Tuesday as investors waited for follow through from China's Politburo statement on strong fiscal stimulus and looser monetary policy next year. The China Economic Work Conference later this week seen as a potential source of this detail while marketeers pointed to evidence of profit taking following ten-day rally. China trade data out today showed export growth slowed by more than expected in November with an accompanying dip in imports too.

  • Elsewhere, RBA left cash rate unchanged at 4.35% as expected but statement leaned dovish, effectively ruling out a rate hike and signaling a pivot to a trim in the near term. February seen as the most likely meeting the RBA will look to trim rates now. South Korea stocks pared much of Monday's losses after its finance minister said officials will do what it takes to stabilize markets and called the recent moves 'excessive'. Among local political developments, the South Korea parliament passed a downsized budget and separately passed a bill on establishing an investigation into Yoon's insurrection charges. The RBI appointed Sanjay Malhotra to be its next governor in a surprise move that left future monetary policy direction unclear, and sending IGB yields and the rupee lower.

  • Nidec's (6594.JP) chairman said the company Is looking to spend up to ¥1T ($6.6B) in up to three M&A deals. KKR and EQT private equity groups said to have made offers for Topcon (7732.JP). BYD (1211.HK) said it will concentrate on expanding its hybrid range of vehicles to the EU amid soft demand for full EVs. CATL (300750.CH) and Stellantis will invest up to €4.1B into an Spain-based EV battery plant by the end of 2026. Mao Geping (1318.HK) debuted on the Hong Kong stock exchange following a $270M IPO, closed 75% higher. Tata Motors (500570.IN) is to hike its prices across its autos range by up to 3% from January as it battles higher costs. TSMC (2330.TT) revealed sales had grown 34% in November y/y on AI demand despite concerns datacenter building will slow. Perpetual (PPT.AU) raised tax estimates on the sale of its wealth management and corporate trust businesses to KKR; stock sharply lower.

• Digest:

  • RBA on hold, board gaining confidence inflation returning sustainably to target:

    • RBA left cash rate unchanged at 4.35% as expected. Statement contained some dovish tweaks with board gaining confidence inflation returning sustainably to target. Another notable omission was line about board not ruling anything or out with respect to rates. Noted upside inflation risks appear to have eased, leaving to removal of need to remain vigilant to upside risks. Bank also noted consumption recovery weaker than forecast following soft Australian Q3 GDP print. While indicators continue to suggest labor market conditions remain tight, RBA noted (Q3) wage pressures eased more than expected. Policy statement changes drove Australian yields lower along the curve while swaps now pricing in ~63% chance of February rate cut vs 50% prior to RBA decision (Bloomberg). In post-meeting press conference, Governor Bullock said board did not consider case for cutting rates at today's meeting and doesn't know if RBA will be easing in February. Noted RBA will be focusing on not just quarterly CPI, but also monthly CPI prints as well as labor market and consumption indicators between now and February meeting.

  • China sovereign bond yields hit new record lows as authorities pledge moderately loose monetary policy:

    • 10Y CGB yield dropped 7 bp to 1.8350% Tuesday afternoon while 30Y yield dipped 6.5 bp to 2.0450%, both at record lows, after Beijing changed its monetary policy stance from "prudent" to "moderately loose" for first time since 2011 at Monday's Politburo meeting. Bloomberg noted the dovish shift to looser monetary policy is fueling more bullish bets on CGBs that will likely send sovereign yields even lower. Various domestic and international brokerages expected 10Y yield will drop to as low as 1.5%-1.6% by end-2025. Recall Bloomberg reported last week that Goldman Sachs and Morgan Stanley had projected rate cuts of 40 bp in 2025, which would be largest reduction in decade. Notably recent CGB rally stands in contrast with its reaction to Beijing's stimulus blitz in September, when there was squeeze on bonds amid expectations that investors would rush to equities from fixed income. Added traders have been rebuilding long positions in bonds since late November, driven by still weak economic data and PBOC's increased liquidity injections to cushion rise in government debt supply.

  • China export growth slows in November while imports drop further:

    • China's exports rose 6.7% y/y in November, missing Reuters forecast of 8.5% and came much slower from October's 12.7%, which was fastest since Jul-2022. Still export growth extended into eighth straight month as Bloomberg noted Chinese exporters rushed to frontload goods to US before Trump takes office to avoid potentially much higher tariffs. Also exports have been bright spot for Chinese economy amid weak domestic demand. Noted volume of exports has risen faster than their value, indicating price cuts by firms. Monday's data showed PPI dropped in November for 26th straight month despite recent stimulus measures. Meanwhile imports shrank 3.9%, compared with consensus of 0.3% growth and followed 2.3% decline in prior month. Trade surplus rose to $97.4B, higher than $95B estimated and $95.7 in October. Widening of trade imbalances may cause more countries to levy tariffs to protect domestic industries from Chinese competition. Noted China now enjoys a trade surplus with almost 170 countries, most since 2021.

  • South Korea equities rally on finance ministry vow to counter market volatility:

    • South Korea's Kospi spiked in opening trades Tuesday to partially reverse Monday's losses after country's finance minister Choi Sang-mok called volatility in financial and forex markets excessive given solid economic fundamentals. Added would closely monitor and stabilize markets by 'all necessary means' (Yonhap). Ministry noted institutional investors recently turned net buyers in stock market, foreign investors showed renewed interest in low-priced assets. Kospi 2.4% higher in early trades, Kosdaq 4.8% higher; 10Y government bond yield down to 2.67%, lowest since Feb-22; won unchanged at 1,430 per dollar and near 2.5-year low. Political crisis continued unabated overnight: prosecutors asked for arrest warrant for former defense minister thought to have suggested martial law to Yoon (Yonhap). National Assembly to vote on establishment of special counsel probe into treason charges against president and several others including ruling party leader (Yonhap).

  • China regulator launches antitrust probe into Nvidia's acquisition of Mellanox:

    • State Administration for Market Regulation (SAMR) initiated an antitrust investigation into Nvidia's (NVDA) acquisition of Mellanox Technologies on suspected violation of China's anti-monopoly law, though there were no details. Regulator approved the deal in 2020 conditional on non-discriminatory actions against Chinese companies. Probe widely seen as retaliation against latest US curbs on chip exports to China (Reuters, Bloomberg). Adds to China's response, previously banning exports of critical minerals to US. Press cited thoughts the probe impact will likely be limited given sales of Nvidia's advanced chips are already restricted in China. Still, Nvidia had dominated China's AI chip market prior to the curbs with a more than 90% market share. China annual revenues have shrunk to about 17% of the total from 26% two years earlier. Prior instance of an anti-monopoly probe into a high-profile foreign tech firm targeted Qualcomm's (QCOM) local subsidiary in 2013 on allegations of overcharging and abusing market position in wireless communication standards. Qualcomm agreed to pay a fine of $975M, which was a record at the time.

  • Notable Gainers:

    • +76.5% 1318.HK (Mao Geping Cosmetics): opens +59.9% at HK$47.65/share on HKEx, closes 76% higher

    • +22.8% 7732.JP (Topcon): KKR, EQT reportedly make offers for company

    • +8.3% 6415.TT (Silergy): Bernstein upgrades to outperform from market perform considering the company a high-quality investment backed by strong growth prospects in Auto Analog

    • +8.2% 270.HK (Guangdong Investment): proposes distribution of 1.26B Guangdong Land shares as special dividend

    • +7.2% 090430.KS (Amorepacific): South Korean cosmetics companies trading higher on expectations of recovering market conditions in China, following signals of a dovish monetary policy shift by China Politburo

    • +4.5% PNBN.IJ (PT Bank Pan Indonesia): DBS, MUFG, SMFG reportedly among parties interested in PT Bank Pan Indonesia

    • +0.4% 6594.JP (Nidec): in an interview with the Nikkei, chairman Shigenbou says the company is looking at three potential M&A targets and could spend up to ¥1T($6.6B) on an acquisition

  • Notable Decliners:

    • -7.0% 9698.HK (GDS Holdings): GDS Holdings unit DigitalLand upsizes equity raising from $1B to $1.2B

    • -6.0% 3349.JP (COSMOS Pharmaceutical): reports November existing stores sales (3.0%) y/y

    • -2.1% 000150.KS (Doosan): Doosan Enerbility, Doosan Robotics terminate spin-off and merger plan

• Data:

  • Economic:

    • China

      • November trade balance $97.4B vs consensus $95.0B and $95.7B in prior month

        • Exports +6.7% y/y vs consensus +8.5% and +12.7% in prior month

        • Imports (3.9%) y/y vs consensus +0.3% and (2.3%) in prior month

    • Australia

      • November NAB business confidence (3) vs +5 in October

        • Business conditions +2 vs +7 in October

  • Markets:

    • Nikkei: 207.08 or +0.53% to 39367.58

    • Hang Seng: (102.81) or (0.50%) to 20311.28

    • Shanghai Composite: 20.13 or +0.59% to 3422.66

    • Shenzhen Composite: 17.84 or +0.87% to 2075.17

    • ASX200: (30.00) or (0.36%) to 8393.00

    • KOSPI: 57.26 or +2.43% to 2417.84

    • SENSEX: (210.76) or (0.26%) to 81297.70

  • Currencies:

    • $-¥: +0.49 or +0.33% to 151.7120

    • $-KRW: +1.38 or +0.10% to 1429.6200

    • A$-$: (0.01) or (0.91%) to 0.6381

    • $-INR: +0.01 or +0.01% to 84.8615

    • $-CNY: (0.01) or (0.17%) to 7.2486