Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei (0.03%), Hang Seng (0.88%), Shanghai Composite (0.16%) as of 03:10 ET

Dec 16 ,2024

• Synopsis:

  • Asian equities mostly lower Monday. Shenzhen and Hang Seng led the decliners after China activity data underwhelmed. Shanghai down with milder drops. Japan moderately lower. Korea pared early gains as impeachment lift turned out to be short-lived. Taiwan flat. Australia lower. India trading weaker too. Singapore outperformed. US futures inching higher. Treasury yields down slightly across tenors, JGB and Australian curves bear steepened. 10Y CGB yield hit new fresh low. Dollar weakest against Aussie and kiwi. Korean won faltered. Crude, gold, and copper all lower. Bitcoin advancing to new all-time high.

  • Asian markets struggled after China retail sales growth in November unexpectedly came below forecasts, reinforcing concerns about country's economy. Adding to weak sentiments last Friday following disappointment with Beijing's stimulus measures at Central Economic Work Conference (CEWC). Fixed asset investment growth also softened with property investment declines worsening, meanwhile house prices in major cities showed slower declines. Industrial production growth firmed, tracking recovery in manufacturing activity. Late Friday's credit data also came weaker with new loans notably below consensus. Over the weekend, PBOC official flagged further rate and RRR cuts in 2025 while government officials pledged to stabilize housing and equity markets in follow-up to CEWC.

  • In other developments, Japan's manufacturing activity shrunk for sixth consecutive month in December, but declines narrowed. Machinery orders rebounded in October. South Korea finance minister said uncertainties eased following Yoon's impeachment while emphasizing country's robust economic system. Australian Treasurer appointed two new members to RBA's monetary board. India's flash composite PMI in December jumped to four-month high with both manufacturing and service sector contributing. Singapore's home sales jumped to highest in a decade in November.

  • US Treasury told Nippon Steel (5401.JP) that panel split on its bid for US Steel (X). Australia's corporate regulator takes legal action on HSBC's (5.HK) local unit for failing to protect customers from loss in fraud. Geely Automobile (15.HK) and Baidu (9888.HK) said they will actively assist the management of their auto JV Jiyue, which is locked in liquidity crisis, in properly handling related matters.

• Digest:

  • China activity data underwhelms:

    • November activity data ranged from in-line to below expectations. Main surprise was retail sales, up 3.0% y/y vs consensus 5.0% and follows 4.8% in the prior month. Most categories declined, led by a spurious tumble in cosmetics, followed by communication equipment, petroleum products, jewelry, apparel, beverage, tobacco and alcohol. Main support still coming from sharp growth in household appliances on the back of the government trade-in program. Growth areas also included food, furniture, autos and building materials. Fixed asset investment expanded 3.3% YTD vs consensus 3.5% and prior 3.4%. Infrastructure growth slowed marginally to 4.2% from 4.3%. Real estate declines edged deeper to 10.4% from 10.3% though details including housing sales showed continuation of gradual easing in negative pressures. New construction starts remained in deep contraction. The lone bright spot was industrial production, up 5.4%, ahead of consensus 5.0% and 4.8% in October. Supported by double-digit growth in robots, passenger cars and solar panels. Integrated circuits and smartphones growth was moderate relative to their respective YTD aggregates. PCs were one of the few notable decliners. Unemployment rate was steady at 5.0% as expected. NBS overall assessment remained sanguine as stimulus effects continued to emerge.

  • South Korea parliament impeaches President Yoon:

    • National Assembly passed a second impeachment motion Saturday against President Yoon in a 204-85 vote after at least 12 members of Yoon's People Power Party crossed party lines (Reuters, Bloomberg). Yoon remained defiant as the motion passes to the Constitutional Court which has 180 days to adjudicate. Ratification would then lead to an early presidential election within 60 days. However, court decision requires at least seven judges to convene with a minimum of six needed to approve it, and there are currently only six sitting judges, posing uncertainty about whether they can proceed. PPP leader Han Dong-hoon announced his resignation Monday (Yonhap). Prime Minister Han Duck-soo has assumed interim presidential duties in the meantime. Top priority for now is stability. Han issued a statement that South Korea will carry out its foreign and security policies without disruption and strive to ensure the South Korea-US alliance is maintained (Reuters). Democratic Party leader Lee Jae-myung called for prompt discussion of a supplementary budget. Finance Ministry vowed on Sunday to deploy market stabilizing measures as required and signaled plans to unveil its biannual policy plan before year-end (Reuters). BOK statement said it would use all available policy instruments in conjunction with the government to respond to and avert any escalation of volatility in financial and foreign exchange markets.

  • China new home prices dip at slowest pace in November since June-2023:

    • New home prices in China were down 0.1% m/m in November based on Reuters calculations of NBS data, after 0.5% dip in October. Prices have extended declines into the 17th consecutive month though November saw the slowest drop over the period. In annual terms, new home prices were down 5.7% y/y, after 5.9% drop in previous month. NBS said more cities witnessed m/m price increases with top-tier cities outperforming lower-tier towns. Only 49 out of 70 cities monitored by NBS reported m/m price drop in new home prices, compared with 63 in September. 58 cities reported m/m drops in second-home prices in November, compared with all 60 in prior month. Bloomberg noted value of these homes fell 0.35% m/m, least since May-2023. Added data offers some hope after recent stimulus measures failed to sustain rebound in sales. Recall policymakers vowed to stabilize property market in 2025 at last week's CEWC with housing ministry official reaffirming pledge over weekend (Bloomberg).

  • Japan PMIs improve, core machinery orders rebound:

    • Flash manufacturing PMI rose to 49.5 in December from 49.0 in the previous month, marking the sixth straight month in contraction. Output declines eased, though new orders and exports fell at a faster pace. Main source of encouragement was an upturn in employment, where labor capacity enabled the strongest clearance of backlogs since March. Finished goods inventories logger narrower declines. Inflation pressures strengthened; input price index rose to a four-month high, contributing to the steepest rise in output prices since July. Outlook uncertainties manifested in the softest expectations since May-22. Services PMI rose to 51.4 from 50.5, the second straight month of expansion. Main driver was a four-month high in new business, while pricing pressures led to an eight-month high in output prices. Composite PMI was 50.8 in December compared to 50.1 in November, signaling marginally positive overall growth momentum. Inflation was cited as the primary overall headwind. Anecdotal evidence emphasized impact of yen weakness exacerbating cost pressures. Core machinery orders rose 2.1% m/m in October, above consensus 1.1%, rebounding from a 0.7% decline in September. Growth in manufacturing sector outweighed a mild decline in nonmanufacturing. Aggregate was mildly above Q3 average, marking a moderately positive start to Q4, albeit short of the 5.7% q/q survey projection.

  • China credit data disappoint, all the attention remains on stimulus:

    • New loans totaled CNY580B ($79.7B) in November, notably below consensus CNY990B, following CNY500B in the previous month. Reuters calculations derived from YTD aggregates showed both household and corporate loans rose moderately on the month, yet Bloomberg noted monthly totals were the lowest since 2016 for this time of year. Cited a Chinese Financial Times article indicating views that local government debt restructuring posed a drag on credit stock as well as NPL disposals though analysts did not sound alarm on underlying trends. Other headline metrics also fell short of expectations. Outstanding loan growth was 7.7% y/y vs consensus 7.9% and slowing from 8.0% in October. Total social financing was CNY2.34T vs consensus 2.8T and prior CNY1.4T. Outstanding TSF growth was unchanged at a record-low 7.8%. M2 money supply expanded 7.1% vs consensus and prior month's 7.5%. Broader attention remained fixed on stimulus plans as markets await details. Nikkei attributed Friday's mainland China equity weakness and fresh lows in bond yields to failure of CEWC to ease market concerns about flagging economic growth. Mentioned thoughts that incremental details did not contain anything that would be consistent with the unconventional measures signaled earlier by the Politburo.

  • Notable Gainers:

    • +5.7% 600177.CH (Youngor Fashion Co.): Alibaba reportedly in talks to sell its stake in department store chain Intime Retail to Youngor Group

    • +1.9% 2330.TT (Taiwan Semiconductor): reportedly close to beginning mass production at Kumamoto plant by year-end

    • +0.8% 3038.JP (Kobe Bussan): reports Q4 results with revenue ahead of FactSet estimates; raises mid-term targets

    • +0.6% 9888.HK (Baidu): Baidu and Zhejiang Geely pledge to help Jiyue Auto solve payroll issues and serve existing customers

  • Notable Decliners:

    • -7.9% 2678.JP (ASKUL Corp): reports H1 earnings with decline in operating income year-on-year; maintains FY guidance

    • -5.7% 9603.JP (H.I.S.): forms special committee to conduct investigation, including examining company's governance following previously announced Tokyo Labour Bureau's inquiry into subsidiary regarding allegations of fraudulent receipt of employment adjustment subsidies

    • -4.3% SIG.AU (Sigma Healthcare): AFR article describes an array of insider and related party transactions which could cause governance headaches, with approval key condition of overall scheme

    • -4.3% 9064.JP (Yamato Holdings): reportedly asks Japan Post to suspend agreement for outsourcing of small, thin packages

• Data:

  • Economic:

    • China

      • November

        • Industrial production +5.4% y/y vs consensus +5.3% and +5.3% in prior month

          • Retail sales +3.0% y/y vs consensus +5.0% and +4.8% in prior month

          • Fixed asset investment (YTD) +3.3% y/y vs consensus +3.5% and +3.4% in prior month

          • Unemployment rate 5.0% vs consensus 5.0% and 5.0% in prior month

        • New house prices (0.1%) m/m vs (0.5%) in prior month - Reuters

          • House prices (5.7%) y/y vs (5.9%) in prior month

        • New loans CNY580B vs consensus CNY990B and CNY500B in prior month (13-Dec)

          • Outstanding yuan loan growth +7.7% y/y vs consensus +7.9% and +8.0% in prior month

          • Total social financing CNY2.34T versus consensus CNY2.8T and CNY1.4T in prior month

          • M2 money supply +7.1% y/y vs consensus +7.5% and +7.5% in prior month

    • Japan

      • December flash manufacturing PMI 49.5 vs 49.0 in prior month

        • Services PMI 51.4 vs 50.5 in prior month

        • Composite PMI 50.8 vs 50.1 in prior month

      • October core machinery orders +2.1% m/m vs consensus +1.1% and (0.7%) in prior month

  • Markets:

    • Nikkei: (12.95) or (0.03%) to 39457.49

    • Hang Seng: (175.75) or (0.88%) to 19795.49

    • Shanghai Composite: (5.55) or (0.16%) to 3386.33

    • Shenzhen Composite: (21.33) or (1.03%) to 2049.10

    • ASX200: (46.50) or (0.56%) to 8249.50

    • KOSPI: (5.49) or (0.22%) to 2488.97

    • SENSEX: (425.83) or (0.52%) to 81707.29

  • Currencies:

    • $-¥: (0.11) or (0.07%) to 153.5670

    • $-KRW: +0.57 or +0.04% to 1436.0500

    • A$-$: +0.00 or +0.11% to 0.6370

    • $-INR: +0.00 or +0.00% to 84.8243

    • $-CNY: +0.00 or +0.06% to 7.2807