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StreetAccount Summary - Asian Market Recap: Nikkei +1.21%, Hang Seng +1.20%, Shanghai Composite +0.85% as of 03:10 ET

Dec 12 ,2024

• Synopsis:

  • Asia equities ended mostly higher Thursday. Technology stocks led boards higher in Japan, South Korea and Taiwan while Hong Kong gained on optimism over stimulus plans. Mainland China benchmarks also higher alongside Singapore. Australia ended lower while several Southeast Asia benchmarks were also negative. US futures lower, Europe slightly higher in opening trades ahead of ECB decision. US dollar down and volatile, offshore yuan weaker again, AUD higher on employment data. Treasury yields higher across tenors, JGB yields lower, CGB yields at fresh record lows. Crude futures flat, precious and base metals mixed. Cryptocurrencies advancing again although bitcoin is slightly lower.

  • Asia equities responding positively to overnight US CPI data that was inline, but which also paves the way for a Fed rate cut next week. Technology stocks led the gainers to follow through from Nasdaq gains, to the particular benefit of Japan's main benchmarks. South Korea bounced back too as financial assets stabilized but as the political turmoil deepened after President Yoon gave a defiant speech amid increased chances of losing an impeachment vote on Saturday. Hong Kong consumer stock outperformed on optimism the economic work conference will announce consumption-specific stimulus programs, and brokerage stocks rose on plans to expand the country's private pension scheme.

  • In macro developments, Australia employment growth was above expectations and the unemployment rate unexpectedly declined, prompting a retreat in RBA rate cut hopes with February odds now at just 50% from 74% prior. Thailand's consumer confidence rose in November thanks to stimulus measures just as the country's prime minister promised more was to come. Ahead, India inflation and industrial production data set to give clues on RBI's next rate step.

  • Seven & i (3382.HK) said sale of some of its non-core assets have advanced with offers from Bain, KKR and JIP. PDD (PDD) has ordered its Temu unit to fix its refunds policy over no-questions-asked refunds. BAIC Motor (1958.HK) and Hyundai Motor (005380.KS) are to inject $547.7M each into a 50/50 Beijing Hyundai join venture. Adani Group stocks including Green Energy (541450.IN), Power (533096.IN) and Energy Solutions (539254.IN) surged in Mumbai as Christopher Wray said would resign prior to Trump being inaugurated as president.

• Digest:

  • Australia employment beats, jobless rate unexpectedly declines:

    • Headline employment rose 35.6K m/m in November, well above consensus 25.0K, following 15.9K in the previous month. Sharp increase in full-time jobs outweighed a decline in part-time work. Unemployment rate fell to 3.9% from 4.1%, contrasting with expectations of an increase to 4.2%. Stronger job growth combined with marginally lower participation rate to 67.0% from a record 67.1% in October. Underemployment also edged lower. On the margins, hours worked was little changed as a relative soft spot as ABS noted this marked the first time in six months when hours growth failed to match employment, though trend remains positive. Aussie dollar strengthened notably on headline effects, while 3-year bond yields climbed and equities eroded early gains. Money markets now pricing in a 50% chance of a February rate cut (Bloomberg). Recall that takeaways from the RBA meeting leaned dovish as the policy statement indicated lower concern about upside inflation risks and economists reaffirmed rate cut calls concentrated around February next year. Governor Bullock said doesn't know if RBA will be in position to cut in February, though flagged upcoming CPI prints (both quarterly and monthly), labor market and consumption data as policy inputs.

  • South Korea President Yoon defiant as ruling party chief pivots to support impeachment:

    • South Korea's President Yoon Thursday called his martial law declaration an "act of governance" and dismissed insurrection charges against him. Said he would fight to the last moment against impeachment charges, other legal probes (Yonhap). Defended martial law declaration as he wanted to normalize state affairs against opposition that had paralyzed government, said sending troops to National Assembly during martial law cannot amount to insurrection. Added National Assembly had become "a monster" that destroys constitutional order of free democracy. Claimed country's national election commission was hacked by North Korea last year but had subsequently refused inspection to safeguard integrity (Reuters). Yoon faces impeachment vote Saturday, opposition still needs eight ruling People's Power Party (PPP) members to vote with them to succeed. However, following Yoon's address, PPP chief pivoted to support impeachment as it had become clear Yoon unable to carry out duties (Yonhap).

  • China expands private pension scheme nationwide from 15-Dec:

    • China said it would expand pilot private pension program to the whole country from 15-Dec in an effort to address pension gap amid rapidly aging population (Reuters). Five government agencies jointly said the program allows workers to contribute as much as CNY12,000 ($1,650) a year into tax-sheltered accounts to invest in financial products, like IRS in US. Scheme expands category of eligible pension products by including government bonds, designated pension savings and index funds. Move follows trials launched in 36 cities in Nov-2022 with more than 60M accounts opened under the pilot program. Meanwhile Bloomberg added disappointing fund performance and lack of investor interest have created challenges for past two years with only 22% of participants have made any deposits. Recall Beijing announced it would raise retirement age starting next year while more than 400M people expected to be 60 or older by 2035.

  • Japan FY24 supplementary budget set to pass lower house with DPP support:

    • Asahi reported the LDP-Komeito coalition reached agreement with DPP on tax policy in exchange for support on the FY24 supplementary budget bill. This means lower house will likely pass the bill in a vote today for likely enactment on 17-Dec. Main concession was a commitment to raise the JPY1.03M ($6,770) income tax-free threshold to JPY1.78M starting 2025. Also, parties exchanged a written agreement to abolish a special gasoline surcharge during certain emergencies. Despite the pact, LDP Secretary-General Moriyama later told reporters that increasing the tax-free threshold to JPY1.78M "cannot be done in one year." Follows earlier reports indicating notable pushback against the measure, which stands to deplete both national and local government tax revenues by some JPY4T each, necessitating a search for other revenue sources to fill the void. Potential alternatives running thin amid reported plans to raise corporate, income and tobacco taxes to fund the defense expansion from as early as Apr-26 (Kyodo). Government looking to increase annual defense funding by JPY1T towards a final goal to double expenditure to 2% of GDP over five years through FY27.

  • Majority of Japanese companies expect Trump administration to harm business:

    • Reuters corporate survey (n=236) found 73% expect Trump's second term in office to have a negative impact on business environment, mainly citing planned tariff hikes and US-China trade tensions. Remainder was optimistic under expectations of US domestic demand growth through tax cuts as well as likely revisions to energy and environmental policies. In response to Trump tariff hikes, two-thirds said their business strategy was unlikely to change, while 22% planning cost cuts and 8% said they would work to expand presence in markets other than the US. Despite Trump risks, half of respondents expect earnings growth in the next fiscal year. About a fifth anticipate y/y declines while remainder see no change. Notable bright spots include banks on the back of rate hikes, shipping supported by higher freight rates and railway operators buoyed by inbound tourism. About 60% of firms project USD/JPY to range between 140 and 150 next year (consistent with corporate earnings guidance). Attention turns to tomorrow's BOJ Tankan survey for comprehensive corporate aggregates and forward-looking signals.

  • Notable Gainers:

    • +15.9% 001570.KS (KUM YANG): signs KRW137.59B contract to supply ESS battery modules to GCC Lab Technical Services

    • +7.6% 006280.KS (GC Biopharma): to acquire blood banks operator ABO Holdings for KRW138.00B in cash

    • +1.9% 034730.KS (SK): reportedly considers sale of 65% Imexpharm stake

    • +0.8% 1958.HK (BAIC Motor): together with Hyundai Motor to inject $547.7M each in two installments into 50-50 JV Beijing Hyundai

  • Notable Decliners:

    • -15.8% 2695.JP (Kura Sushi): reports FY revenue and operating profit below FactSet estimates

    • -2.2% 7201.JP (Nissan Motor): confirms CFO Stephen Ma to step down and become chairperson for China business; North America chairperson Jeremie Papin appointed replacement

    • -1.6% 3382.JP (Seven & i): sale of non-core operations reportedly advances with offers from Bain, KKR, and JIP

    • -0.3% 968.HK (Xinyi Solar Holdings): USTR reportedly expected to announce more tariffs on Chinese solar wafers, polysilicon and tungsten

• Data:

  • Economic:

    • Australia

      • November employment +35.6K m/m vs consensus +25.0K and +15.9K in October

        • Unemployment rate 3.9% vs consensus 4.2% and 4.1% in October

        • Participation rate 67.0% vs consensus 67.1% and 67.1% in October

  • Markets:

    • Nikkei: 476.91 or +1.21% to 39849.14

    • Hang Seng: 242.00 or +1.20% to 20397.05

    • Shanghai Composite: 29.01 or +0.85% to 3461.50

    • Shenzhen Composite: 21.98 or +1.05% to 2112.90

    • ASX200: (23.30) or (0.28%) to 8330.30

    • KOSPI: 39.61 or +1.62% to 2482.12

    • SENSEX: (228.72) or (0.28%) to 81297.42

  • Currencies:

    • $-¥: +0.16 or +0.10% to 152.6200

    • $-KRW: +2.21 or +0.15% to 1431.3800

    • A$-$: +0.00 or +0.66% to 0.6412

    • $-INR: +0.03 or +0.03% to 84.8459

    • $-CNY: (0.00) or (0.02%) to 7.2620