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StreetAccount Summary - Asian Market Recap: Nikkei +0.01%, Hang Seng (0.77%), Shanghai Composite +0.29% as of 03:10 ET

Dec 11 ,2024

• Synopsis:

  • Asia equities ended mixed Wednesday. Among the benchmarks that finished higher were South Korea, mainland China and Japan's Topix, while India is also trading slightly higher. The Nikkei finished flat. The Hang Seng fell and has now given up around half of last Friday's advances. Australia, Singapore and Taiwan all closed lower. US futures mixed, Europe opened lower. Dollar unchanged, yen stronger, yuan fell on reports Beijing would allow currency to weaken. Treasury yields higher across tenors, CGBs hovering near record lows, JGB yields bounced back from recent declines. WTI crude higher, Brent flat. Precious metals also mixed. Iron ore taking another leg lower.

  • Asia equities mixed again Wednesday as many benchmarks responded to local developments rather than any overarching theme. Mainland China boards inched ahead once again but the Hang Seng drifted lower all day, signifying a loss of positive momentum following Monday's reports of looser monetary policy and higher fiscal spending. Speculation post the Shanghai close said Beijing may allow the yuan to weaken to counter Trump's trade policies, sending the onshore and offshore yuan sharply higher and CGB yields to fresh record lows. China Economic Work Conference began with leaders set to discuss economic and policy priorities in 2025, with statement expected Thursday on progress.

  • South Korea stocks rose again despite the probe into President Yoon deepening as he faces an impeachment vote Saturday, several prominent police officers were arrested, and the former defense minister attempted suicide. In macro developments, Japan producer inflation rose to its highest in 16 months and its business survey index also strengthened. Reuters Tankan survey showed manufacturer sentiment turned negative but services sector sentiment improved. Ahead, US CPI later Wednesday is expected to show annualized core unchanged but still leaving Fed on track to cut rates by 25 bp in December.

  • Nissan Motor (7201.JP) said it has moved its current CFO to head its China operation, and appointed head of North America as new chief finance officer as the management reshuffle continued. Topcon (7732.JP) said no decision has been made on whether to accept a bid from either KKR or EQT; stock sharply higher for second day. Fosun Tourism Group (1992.HK) is to buy back all shares in issue not held by controlling shareholders for HK$7.8 per share taking itself private. Skyworth (751.HK) is in talks to buy Funai Electric's television business in Japan and North America. Adani Ports & SEZ (532921.IN) said it will finance its Colombo port terminal project through internal means, and withdrew its funding request from US overseas funding body.

• Digest:

  • China is mulling weaker yuan in 2025 to counteract higher US tariffs:

    • USD/CNH spiked as much as 330 pips after Reuters citing people with knowledge broke story that Chinese authorities are considering allowing a weaker yuan in 2025 as they brace for higher tariffs during Trump's second term. Noted move would reflect Beijing's recognition that it needs bigger economic stimulus to deal with tariff risk. Added Monday's Politburo readout noted China would implement a "moderately loose" monetary policy next year, making such stance for first time in 14 years. Meanwhile statement did not contain phrase "need for a basically stable yuan", which was last mentioned in July. Weaker yuan would make Chinese exports cheaper, mitigating impact of higher tariff and creating looser monetary settings in the country. Article mentioned PBOC unlikely to explicitly declare it will no longer upload currency, instead it will emphasize allowing more market power in determining yuan's value. A source said PBOC has considered possibility yuan could drop to 7.5 per dollar to offset trade shocks, compared to analysts' forecast of 7.37 level by end-2025.

  • South Korea President Yoon set for impeachment vote Saturday:

    • South Korea police raided President Yoon's office Wednesday escalating political crisis just hours before opposition submits second impeachment bill in National Assembly (Yonhap). First attempt defeated last Saturday but, since then, several ruling party members spoke in favor of motion with just eight needed to join opposition bloc for impeachment to succeed. Ruling People's Power Party still looking for resignation alternative to impeachment; party said PM Han is to manage state affairs while it looked for 'orderly' way for president to resign (Reuters). Head of South Korea's Corruption Investigation Office said his office prepared to arrest Yoon if required while national police chief and head of Seoul police detained as part of probe (Yonhap). Former defense minister Kim, also arrested as part of the martial law probe and is thought to have suggested idea to President Yoon, reportedly attempted suicide while in custody but has survived (Yonhap).

  • Biden reportedly set to block US Steel sale to Nippon Steel:

    • Bloomberg sources indicated US President Biden plans to formally block the sale of US Steel (X) to Nippon Steel (5401.JP) on national security grounds once the deal is referred back to him later this month. US Steel shares dropped as much as 22% and closed down 9.7%. CFIUS must refer its decision to Biden by December 22 or 23. Article said CFIUS conclusion remains unclear, though any referral to the president suggests at least one panel member sees risk from the deal. Both companies apparently poised to pursue litigation if the merger is blocked. Exact timing of a Biden announcement is also unclear -- president has 15 days from referral to announce a decision. Another extension of the CFIUS process, which would defer decision to Trump administration, is not expected. Nippon Steel in a statement argued politics outweighing true national security interests, especially given the strong US-Japan alliance. Followed an announcement that Nippon Steel will offer a $5K bonus to non-union US employees below senior management level if the deal closes. Added Europe employees will be awarded EUR3K, taking total closing bonuses to nearly $100M.

  • China stimulus reverberations continue:

    • Following stronger stimulus language in the Politburo statement, Bloomberg discussed the overall muted reactions in global markets, leaving MSCI Asia Pacific and commodity markets little changed. Cited thoughts that policy signals still don't augur for enough support for China's economic growth amid US-China trade frictions, though another explanation was that markets are reserving judgement until policy details are revealed. Reuters highlighted the main takeaway that authorities have likely accepted an increase in the debt-to-GDP ratio in order to maintain an anticipated growth target of about 5% for 2025 in the face of the risk of higher US import tariffs under the incoming Trump administration. Xinhua digest confirmed Politburo signaled stronger support measures, set to add fuel to recent signs of economic pickup according to latest data. Separately, President Xi told a meeting of international organization chiefs Tuesday that China is fully confident in achieving the 2024 growth target and will continue to drive global growth (Xinhua), echoing prior comments from senior officials, suggesting Q4 GDP will come in sufficiently firm. Earlier press discussions explored the likelihood that annual growth of 4.9% would be deemed consistent with the goal, though with some unclarity about Beijing's tolerance range.

  • ADB trims Asia growth forecast with risks skewed to the downside:

    • Developing Asia will likely grow more slowly next year than previously projected, according to Asian Development Bank. Said risks also skewed to downside on deeper-than-expected changes to US's trade policy, geopolitical tensions, and if China's property market weakens. Bank lowered FY-24 growth estimate for region to 4.9% from 5.0% estimate in September; FY25 forecast to 4.8% from 4.9%. Bank blamed trim on stagnant Q3 economic growth in several countries, forecast consumption to remain subdued next year and inflation to ease further. Kept growth forecasts for many countries unchanged, including China at 4.5%; lowered India growth to 7.0% from 7.2% post poor Q2, lagged government spending; raised Vietnam growth to 6.6% from 6.2%. Bank calculated 'high-risk' scenario of 60% tariffs would dent China economic growth by 1.2% over four years, enough to dampened regional growth by 0.6 percentage points, including initial positive impact from front loading of exports.

  • Notable Gainers:

    • +80.0% 1992.HK (Fosun Tourism Group): announces privatization offer at HK$7.8/share

    • +23.2% 7732.JP (Topcon): clarifies media reports on privatization following reports that KKR and EQT made offers; states that no decision has been made at this time

    • +2.9% 004170.KS (Shinsegae): reports November revenue KRW170.90B, +3.5% y/y

    • +2.9% 3064.JP (MonotaRO): reports November sales ¥23.95B, +13.2% vs year-ago ¥21.17B

    • +1.5% 4452.JP (Kao): holder Oasis Management discloses 5.23% stake; to nominate five director candidates from upcoming AGM

    • +1.4% 9749.JP (Fuji Soft): Bain Capital reportedly increases offer to ¥9,600/share from ¥9,450/share

    • +1.0% 4922.JP (KOSE Corp): to acquire 80.0% stake in cosmetics company PURI; terms undisclosed

    • +0.0% 751.HK (Skyworth Group): reportedly in talks to buy Funai Electric's TV business in North America and Japan

  • Notable Decliners:

    • -1.9% 1813.HK (KWG Group Holdings): reports November pre-sales value CNY650M, (48.0%) y/y

    • -1.1% 17.HK (New World Development): reportedly sells Hong Kong industrial building Artisan Lab for HK$620M

    • -0.7% 5711.JP (Mitsubishi Materials): CEO/president Naoki Ono to retire, effective 31-Mar

    • -0.3% 7201.JP (Nissan Motor): Nissan North America president Jeremie Papin reportedly to be named Nissan Motor CFO replacing Stephen Ma

• Data:

  • Economic:

    • Japan

      • November CGPI +3.7% y/y vs consensus +3.4% and revised +3.6% in prior month

      • December Reuters Tankan manufacturers sentiment index -1 vs +5 in prior month

        • Service sector index +30 vs +19 in prior month

      • Q4 MOF BSI large manufacturing index 6.3 vs 4.5 in prior quarter

        • Large non-manufacturing index 5.4 vs 5.4 in prior quarter

        • Large all-industry index 5.7 vs 5.1 in prior quarter

    • South Korea

      • November unemployment rate 2.7% vs consensus 2.8% and 2.7% in prior month

  • Markets:

    • Nikkei: 4.65 or +0.01% to 39372.23

    • Hang Seng: (156.23) or (0.77%) to 20155.05

    • Shanghai Composite: 9.83 or +0.29% to 3432.49

    • Shenzhen Composite: 15.75 or +0.76% to 2090.92

    • ASX200: (39.40) or (0.47%) to 8353.60

    • KOSPI: 24.67 or +1.02% to 2442.51

    • SENSEX: 83.36 or +0.10% to 81593.41

  • Currencies:

    • $-¥: (0.32) or (0.21%) to 151.6520

    • $-KRW: (4.19) or (0.29%) to 1431.6800

    • A$-$: (0.00) or (0.36%) to 0.6354

    • $-INR: (0.02) or (0.02%) to 84.8651

    • $-CNY: +0.01 or +0.17% to 7.2624