Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Shanghai Composite (1.63%), ASX (0.92%), Taiwan Taiex (0.67%) as of 03:10 ET

Dec 31 ,2024

• Synopsis:

  • Asia equities ended mostly lower Tuesday. Steep falls in mainland China, Australia and New Zealand to end the year on a sour note. More modest losses for Taiwan, India and Singapore. Hong Kong ended flat in a volatile session exacerbated by thin volumes. Japan, South Korea, Indonesia, Thailand and Philippines closed for a holiday. US futures mixed, Europe opened slightly lower. Dollar a smidge weaker, yen notably stronger, other Asia currencies quiet. Crude oil futures higher, base metals under some pressure, gold higher. Cryptocurrencies unchanged.

  • Regional sentiment continues to be cautious amid the Trump tariff overhang, political turmoil in South Korea, and weak currencies. China official PMIs showed manufacturing activity slightly softer than expected, though non-manufacturing beat on a pickup in services and construction. Today, President Xi reiterated China's annual growth would be 'around 5%', hitting an earlier target. South Korea headline CPI inflation was higher than expected though core inflation edged lower. In political developments, a Seoul court issued an arrest warrant for President Yoon although it is unclear whether it would be served, or whether Yoon would be taken into custody. Further, acting President Choi appointed two judges to the Constitutional Court, going some way to meet opposition politician's demands.

  • For the quarter, Asia stocks were notably weaker as regional currencies sank and trade uncertainties resurfaced. Anxiety over China's economy also led to weakness with the Hang Seng giving up some of September's surge while South Korea underperformed on won weakness and its domestic political turmoil. Annual returns varied widely, with many seeing a contrast in returns depending on use of local or US dollar currencies. Australia's ASX was 7.5% higher in AUD terms but down 2.1% in USD; the Kospi was down 9.6% in won terms, and almost 21% lower in USD; the Nikkei was 19.2% higher in yen terms, but just 6.9% higher in USD.

  • Wingtech Technology (600745.CH) said it will sell nine different business units to Luxshare Precision Industry (128136.CH) to concentrate on its semiconductor business. Samsung Electronics (005930.KS) has become the largest shareholder in Rainbow Robotics (277810.KS), according to filings. Adani Wilmar (543458.IN) says it will exit its consumer goods joint venture with Wilmar International (F34.SP) in a $2B deal with a Wilmar subsidiary Lence.

• Digest:

  • China official PMIs mixed, non-manufacturing activity notably stronger:

    • Official manufacturing PMI was 50.1 in December, slightly below consensus and prior month's 50.3. Marks the third month in marginal expansion territory. Production growth softened marginally, and exports continued to lag, though small acceleration in new orders took the sub-index to the highest since April. NBS highlighted agriculture/food and electrical machinery as growth sectors, while steel remained in contraction. Inflation metrics logged bigger declines, particularly output prices. Employment and finished goods inventories remained in contraction. By industry size, softer readings in large and small firms were offset by better medium-sized enterprises. Main surprise came in the non-manufacturing PMI at 52.2 (highest since March), markedly above consensus 50.2 and follows 50.0 in the previous month. Mainly reflects meaningful narrowing new order declines. Construction and services sectors both registered notable acceleration. NBS said construction strength reflects front-loaded activity ahead of Lunar New Year. On the back of non-manufacturing strength, composite PMI improved to 52.2 from 50.8, also the highest since March.

  • Chinese stocks post first annual gain since pandemic:

    • Chinese stocks posted first annual gain since pandemic in 2024, boosted by Beijing's stimulus blitz in September. CSI 300 has advanced 14.7% in 2024, ending three-year losing streak. Hang Seng rose 17.7%, first annual gain since 2019. Hang Seng China Enterprises jumped 26.3%, biggest yearly increase since 2009. Compared with MSCI Asia Pacific ex-Japan Index's gain of 8%. Bloomberg noted positive milestones signaled some skeptics have turned into believers, adding investors allocated $5.6B to Chinese equity funds in the week through 11-Dec, biggest inflow in nine weeks. Meanwhile sharp rebound in late September largely fizzed out in Q4, with CSI 300 and Hang Seng both logging quarterly losses. Analysts said China needs to address some of the entrenched issues, including property slump, weak consumer confidence and deflationary risks to sustain growth momentum. Separately PBOC said it will conduct second round of security, funds and insurance companies swap facility (SFISF) with 1Y term, part of stimulus initiatives launched in September, with amount likely to exceed CNY50B. CSRC will also allow 20 more institutions to participate in SFISF, adding pool to 40 (SecuritiesTimes).

  • Seoul court issues arrest warrant for President Yoon over martial law declaration:

    • South Korea's President Yoon faces arrest warrant over masterminding martial law declaration, orchestrating insurrection and abuse of power, according to sources cited by Yonhap. Warrant comes after Yoon ignored three summonses from anti-corruption agency to answer questions over martial law events. Investigators have 48 hours to make arrest however not clear whether investigators could detain president as security service previously blocked investigators from entering Yoon's office and compound. Investigators not said if they would act on warrant but, if successful, would be first time sitting, if suspended, president has been taken into custody. Yoon remains defiant, says anti-corruption body does not have legal grounds to seek arrest warrant, martial law decree within his constitutional powers. Later in the day, acting President Choi confirmed he had appointed two judges to the Constitutional Court, moving some way to easing tensions between the two sides (Yonhap).

  • South Korea CPI slightly firmer than expected:

    • Headline CPI rose 1.9% y/y in December, marginally above FactSet consensus 1.8%, following 1.5% in the previous month. Core inflation eased to 1.8% from 1.9%. Main surprise came in food prices; vegetables rose 9.8% for the highest reading since 2010 (Yonhap). Offsetting factor was a 1.1% decline in petroleum. Daily necessities basket rose 2.7%, the first sub-3% print in four years. BOK policy implications largely benign with monthly inflation remaining below target and 2024 aggregate of 2.3% in line with the BOK projection. Immediate attention remains on domestic political turmoil stemming from the martial law decree that has added to won pressures (Bloomberg). Underlying concerns surround weak consumer sentiment, compounded by Sunday's plane crash. Acting President Choi declared a week-long mourning period through 4-Jan. Narrative has not shifted since consensus forecasts looked for the next rate cut in January. Minutes for the November MPM revealed some urgency to respond to economic weakness as board members voted to cut the policy rate by 25 bp. One member called for pre-emptive action, though acknowledged that rate cuts alone would be insufficient and placed the onus on fiscal support.

  • China trade dependence on US drops to new low as Trump tariffs loom:

    • Nikkei discussed the waning US share of China trade as Beijing prepares for potential tariff hikes under Trump 2.0. Citing China customs data, US accounted for 11.2% of China's aggregate exports and imports in dollar terms over Jan-Nov, marking the lowest since China joined WTO in 2001. China has reduced reliance on US trade since the reciprocal tariff bout of 2018-19 during Trump's first term in office. Trump is eyeing 10% tariff hikes on nearly all China imports. Previously threatened a 60% levy, which JCER estimates would drag China 2025 GDP growth from 4.7% to 3.4%. Much of China's exports being diverted to Southeast Asia with a Jan-Nov share of 16%, more than any other country or bloc. Shipments to Cambodia and Vietnam both up almost 20%. Trend consistent with views that China is rerouting US-bound exports through third countries to avoid tariffs, while prompting growing concerns that China is exporting deflation to developing regions. On imports, China turning to alternative sources of grains. Brazil has been the largest supplier of soybeans at 70% of the total with US at 20%. US share of wheat imports has fallen below 20% from nearly 40% in 2017, substituted by Australia, Canada and France. Some analysts suggested the trend could shift if trade tensions escalate, motivating Trump to make a deal with China.

  • Notable Gainers:

    • +10.0% 600745.CH (Wingtech Technology): Intends to dispose 9 companies and assets to Luxshare limited; to focus on semiconductor business

    • +4.6% 2404.TT (United Integrated Services Co.): Management guides on FY results

    • +1.6% 000596.CH (Anhui Gujing Distillery): Declares Q3 interim dividend CNY1.00/share

  • Notable Decliners:

    • -7.1% 543458.IN (Adani Wilmar): Adani Enterprise to sell 31.06% of Adani Wilmar to Wilmar International subsidiary Lence

    • -4.4% 543272.IN (Easy Trip Planners): Chair & CEO Nishant Pitti reportedly to sell entire 14.21% stake via block deal at floor price INR15.6/share today

• Data:

  • Economic:

    • China December

      • Official manufacturing PMI 50.1 vs consensus 50.3 and 50.3 in prior month

        • Non-manufacturing PMI 52.2 vs consensus 50.2 and 50.0 in prior month

        • Composite PMI 52.2 vs 50.8 in prior month

    • South Korea December

      • CPI +1.9% y/y vs FactSet consensus +1.8% and +1.5% in prior month

        • CPI ex-food & energy +1.8% y/y vs +1.9% in prior month

  • Markets:

    • Nikkei: Closed

    • Hang Seng: 18.53 or +0.09% to 20059.95

    • Shanghai Composite: (55.56) or (1.63%) to 3351.76

    • Shenzhen Composite: (51.07) or (2.54%) to 1957.42

    • ASX200: (75.90) or (0.92%) to 8159.10

    • KOSPI: Closed

    • SENSEX: (195.56) or (0.25%) to 78052.57

  • Currencies:

    • $-¥: (0.67) or (0.43%) to 156.1700

    • $-KRW: (0.80) or (0.05%) to 1471.1700

    • A$-$: (0.00) or (0.08%) to 0.6217

    • $-INR: +0.10 or +0.12% to 85.6141

    • $-CNY: (0.00) or (0.01%) to 7.2983