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Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei +1.19%, Hang Seng +0.82%, Shanghai Composite (0.50%) as of 03:10 ET

Dec 23 ,2024

  • Synopsis:

    • Asian equities ended higher almost everywhere in a quiet Monday session. Taiwan, South Korea and Australia posted strong gains; Japan, Singapore and Hong Kong also ended higher. India trading only marginally higher. Mainland China boards the only main benchmarks showing a small loss. US futures trading higher, Europe opened with strong gains. US dollar a tad stronger, yen and yuan weaker. Treasury yields higher across tenors, Asia yields a few ticks stronger. Crude futures trading higher, precious metals mixed, industrial metals also mixed in thin trade.

    • Asia markets higher almost everywhere Monday but volumes were notably thinner on the main boards. Sentiment in the region improved markedly following the strong finish on Wall Street Friday. Some volatility remains in mainland China markets, which remain somewhat immune from global markets trends for now. Currencies also remain volatile with the yen weakening again today just as positioning data showed analysts bearish on the yen well into 2025. China bond rally continued with CGB 10Y yield below 1.7% to new record low Friday before a modest rally Monday.

    • Honda Motor (7267.JP) and Nissan Motor (7201.JP) are set to launch integration talks with view to completing integration in 2026, listing in Aug-26; companies considering creation of holding company for merger. Nippon Steel (5401.JP) said the White House had 'impermissible undue influence" over its US Steel bid and threatened legal action if the deal was blocked. Singapore Post (S08.SP) said it had fired its CEO and several other executives over the handling of a whistleblower report; shares sharply lower.

  • Digest:

    • Yen outlook turning more bearish amid Fed-BOJ divergence:

      • Yen remains volatile after falling to lowest against dollar since July. Dovish takeaways from BOJ meeting focused on Governor Ueda's press conference and lack of concern about FX weakness posing upside inflation risk, along with his attention on outcome of March/April wage talks. That saw BOJ rate hike expectations slip with January considered less likely in favor of March. Meanwhile, last week's hawkish Fed rate cut brought more attention on US-Japan yield divergence with Treasury 2Y premium widening by 24 bp since early December. Yen positioning turning more bearish with speculative net shorts in week ended 17-Dec rising the most since July according to CFTC data (Bloomberg). Options traders least bullish on yen in a month. Yen weakness prompting target revisions by FX strategists, some now eyeing end-2025 levels of 140 or above (vs 130 previously) while others see risk of more pronouncedmove to 160 level.Yen depreciation triggered fresh verbal warnings from Japan officials last week with Finance Minister Kato vowing appropriate action against excessive moves (Bloomberg).

    • China's property debt crisis enters fifth year with no improvement in sight:

      • China property developers have endured turbulent 2024 with Hang Seng Properties index down 20% year-to-date. Flurry of policy support announcements including PBOC-backed refinancing plans, mortgage rate cuts and relaxed purchasing restrictions have failed to meaningfully put a dent on a supply glut and revive housing demand, driving a relentless fall in home prices. That is adding to stresses among developers with Bloomberg data showing another $15B in dollar bond defaults this year. Developers have defaulted on $130B over past five years. Bloomberg-compiled data also shows developers tracking for smallest annual issuance in at least 10 years, raising just $67.3B this year. Among latest developments, New World requesting loan deadline extensions while China regulators probing insurers' exposure to Vanke. China's leaders recently reaffirmed pledge to stabilize property market, though continued decline in housing sales and bank reluctance to lend fueling concerns crisis will extend into 2025.

    • RBI minutes show policymakers split on whether to cut interest rates in December:

      • Minutes from December's RBI MPC meeting showed members differed on timing for rate cuts, with two members voting for rate cut at 4-6 Dec meeting. Four voted for no base rate change at 6.5% although bank also cut CRR by 50 bps to aid liquidity, effectively easing monetary controls slightly. Minutes showed members influenced by India's elevated inflation levels, especially in food, and stumbling economic growth. Outgoing Governor Das said lower inflation will enhance household's disposable income, increase purchasing power. Added high prices cause of demand slowdown in India, and aligning inflation to bank's 4% target key to sustaining growth. One dissenter said monetary policy has limitations in addressing inflation which is driven by supply-side shocks, cut would help growth without worsening inflation. However, another who voted to keep rates steady, said inflation-growth balance no longer 'well poised', danger hurried decision could lead to policy error.

    • Treasuries on track for bruising finish to 2024 as Fed rate cut expectations are wound back:

      • Treasuries tracking for a subdued finish to 2024 with recent volatility erasing its yearly gains. Curve has steepened notably in period leading up to and following Trump's election win. Treasury 10Y yield up 91 bp since mid-September low while 2Y rate has risen 77 bp, widening premium from 6 bp to 22 bp over that time towards highest since 2022. This year's Fed easing cycle a notable contrast with prior phases where yields fell more than 30 bp in first three months following 2019 and 2007 rate cut cycles. Fed and markets have dialed back projected rate cuts in 2025, giving rise to expectations of a shallow easing cycle with pause phases (Bloomberg). Markets not fully pricing in next Fed rate cut until June are only pricing in 1-2 reductions by end-2025. Rising yields renewing discussion on outlook for steepener trades with fixed income strategists seeing value in 2Y securities yielding similar to 3M notes. Conversely, dissection of Trump's economic policies (tariffs, tax cuts and deficits) coupled with stalling disinflation momentum and resilient economy among factors weighing on longer-term debt.

    • Another record year for Japan share buybacks:

      • Nikkei analysis showed Japan share repurchases totaled JPY16.81T ($108B) in 2024, a third consecutive record high and up 75% from 2023. When combined with dividends, companies returned 60% of net profit this year. More companies engaging in capital return with 1,079 firms representing a 22% increase on 2023. Buybacks prevalent among banks and insurers, while unwinding of cross shareholdings have also contributed to the growth.While boost in buybacks has been a result of stronger earnings (net profits up 15% during September half), step up in capital return also a function of regulatory efforts to improve capital efficiency. Buyback activity expected to remain buoyant in 2025 as corporate reform focus encourages tendency towards boosting shareholder returns. Japan firms held ~JPY112T in funds as at end of September. At same time, companies seen needing to strike balance between shareholder returns and raising wages amid pressure from unions going into 2025 shunto (recall Rengo calling for wage hikes of at least 5%).

    • Notable Gainers:

      • +30% 034120.KS (Seoul Broadcasting System): signs six-year strategic partnership contract with Netflix

      • +13.7% 272210.KS (Hanwha Systems): receives integrated ECS order for Ulsan-class Frigate Batch-IV for ROK Navy

      • +10% 2276.HK (Shanghai Conant Optical Co.): to place 53.3M shares at HK$15.86/sh to Goertek

      • +4.6% 5G3.SP (Talkmed Group): TW Troy offers S$0456/sh to take TalkMed private

      • +2.5% 4547.JP (Kissei Pharmaceutical): EC grants additional indication for endometriosis to YSELTY

      • +1.6% 7201.JP (Nissan Motor): reportedly to officially start merger talks with Honda today

      • +1.1% 004170.KS (Shinsegae): Shinsegae Group chairman Chung Yong-jin becomes first Korean businessman to meet with US President-elect Trump

    • Notable Decliners:

      • -11.8% 007070.KS (GS Retail Co.): first day of trading since spinoff announced in June

      • -8.9% S08.SP (Singapore Post): CEO, CFO terminated following conclusion of investigations over whistleblower's report; new CEO to be appointed in due course

      • -8.0% 4516.JP (Nippon Shinyaku): jury awards Sarepta Therapeutics and University of W. Australia $115.2M in lost profits in patent litigation with Nippon Shinyaku

      • -4.4% 440110.KS (FADU, Inc.): FSS indictment on alleged inflated listing

  • Data:

    • Economic:

      • Singapore

        • November CPI y/y +1.6% versus consensus +1.7% and +1.4% in prior month

    • Markets:

      • Nikkei: 459.44 or +1.19% to 39161.34

      • Hang Seng: 162.43 or +0.82% to 19883.13

      • Shanghai Composite: (16.81) or (0.50%) to 3351.26

      • Shenzhen Composite: (46.79) or (2.29%) to 1995.10

      • ASX200: 134.60 or +1.67% to 8201.60

      • KOSPI: 37.86 or +1.57% to 2442.01

      • SENSEX: 277.83 or +0.36% to 78319.42

    • Currencies:

      • $-¥: +0.23 or +0.15% to 156.6420

      • $-KRW: +5.04 or +0.35% to 1451.3900

      • A$-$: +0.00 or +0.03% to 0.6252

      • $-INR: +0.14 or +0.17% to 85.0902

      • $-CNY: +0.00 or +0.02% to 7.2981

  • Asia market recap will not be published on 25-Dec and will return on the 26-Dec.

This information and data is provided for general informational purposes only. The Bank of New York Mellon and our information suppliers do not warrant or guarantee the accuracy, timeliness or completeness of this information or data. We provide no advice nor recommendation or endorsement with respect to any company or securities. We do not undertake any obligation to update or amend this information or data. Nothing herein shall be deemed to constitute an offer to sell or a solicitation of an offer to buy securities.
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