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StreetAccount Summary - Asian Market Recap: Hang Seng +0.70%, Shanghai Composite (1.57%), Kospi +1.79% as of 03:10 ET

Jan 03 ,2025

• Synopsis:

  • Asia equities traded mixed Friday. South Korea's Kospi ended sharply higher after acting President Choi vowed market stabilization measures. Hang Seng bounced back a little from yesterday's losses although was volatile, mainland boards sharply negative again. Small gains for Australia and Taiwan, India lower, Southeast Asia mixed. Japan still closed. US futures slightly higher, Europe opened flat. Dollar weaker, yen and AUD responded with gains, onshore yuan weakened to 14-month low. Treasury futures higher, South Korea sovereign yields lower, CGB yields at fresh record lows. Crude and gold higher, base metals under pressure with iron ore sharply down.

  • Asia markets remain in cautious mood and ended a holiday-impacted week lower. South Korea supported by fresh promises from acting president Choi, who is also the finance minister, to use 'bold and swift' measures to steady financial markets if volatility worsens. Local traders seeming brushing aside latest political developments, which today saw a five-hour standoff between investigators and police, and the president's security staff at the presidential compound as President Yoon successfully evaded detention.

  • US-China trade frictions escalated as China commerce ministry proposed export restrictions on technology for some battery components and processing of rare earths. Beijing also said it would include smartphones and other electronic devises in a trade-in program, designed to boost consumption.

  • US President Biden is set to block the sale of US Steel to Nippon Steel (5401.JP). The Singapore market regulator has called for an independent inquiry into SingPost's (S08.SP) dismissal of executives following a whistleblower report.

• Digest:

  • South Korea investigators end attempt to detain impeached President Yoon after tense standoff with security officers:

    • Investigators from South Korea's ended attempts to detain impeached President Yoon Suk Yeol, said virtually impossible to arrest him amid confrontation with Yoon's security detail, safety concerns (Yonhap). Standoff between Corruption Investigation Office (CIO) officials plus more than 2,700 law enforcement officials, and Yoon's security detail lasted more than five hours; Yoon's side refused access to presidential compound citing restrictions to secured areas. Detention complicated further by pro-Yoon protestors stationed outside president's home, and court-imposed deadline of Monday to execute warrant. If Yoon detained, CIO has 48 hours to seek formal arrest warrant or release him (Yonhap); Yoon's lawyers called detention warrant "illegal and invalid". Yoon also faces pre-trial hearing later Friday which is expected to clarify main disputes in trial (Yonhap). Separately Friday, acting President Choi said Friday government would take 'swift and bold' measures to stabilize markets if necessary (Yonhap). Kospi responding positively to developments Friday, won also strengthened, sovereign yields dipped.

  • Biden said to block Nippon Steel acquisition of US Steel:

    • Washington Post, citing two administration officials, reported President Biden has decided to block Nippon Steel's (5401.JP) acquisition of US Steel (X). Shortly follows a CBS article indicating Biden will likely announce a decision as early as Friday. Recalled Biden's prior opposition to the deal and wants US Steel to remain American owned and operated. Biden has discussed the matter with top advisers in recent days including Secretary of State Blinken. Sources said US Steel has indicated it will likely file lawsuits, including against the Biden administration, if the president blocks the acquisition. Nippon Steel proposed Tuesday to give the US government veto authority over any change to US Steel production capacity. This was a tweak to an earlier suggestion to grant production-related decision-making power to a CFIUS-appointed board. According to another source, Nippon Steel's proposal offers a 10-year guarantee that it would not cut US production capacity without CFIUS approval. Story added CFIUS agencies were not opposed to the deal with the exception of USTR Tai.

  • Onshore yuan hits lowest level against dollar since Nov-2023:

    • Onshore yuan weakened past 7.30 per dollar for first time since Nov-2023 and recorded fourth straight weekly losses amid falling bond yields and domestic rate cut expectations. USD/CNH also spiked to 7.35. Came after onshore yuan's 2.8% drop in 2024, its third successive annual decline, as China has been grappling with persistent property downturn and lackluster domestic consumption. Meanwhile Chinese government bond yields have been hitting record lows in recent weeks with 10Y CGB yield falling below 1.60% for first time Friday, driving capital flows out of China into high-yielding dollars. FT added PBOC said it was likely to cut interest rates from current level of 1.5% "at appropriate time" in 2025. Meanwhile PBOC has been lending support to currency via daily fixing. It came at 7.1878 per dollar Friday with strongest bias than Bloomberg survey since July. However the tight grip will soon face tests after Trump takes office later this month and works on his pledge to impose much higher tariffs on Chinese goods.

  • US-China trade frictions escalate:

    • Reuters reported a Commerce Ministry proposal to add export restrictions on some technology used to make battery components and process critical minerals lithium and gallium. Proposals open for public opinion through 1-Feb before a decision is made (Xinhua). Bloomberg recalled gallium, germanium, antimony and superhard materials are no longer allowed to be shipped to America, while sales of graphite has been placed under tighter controls. Ministry also added 28 US entities to the export control list, prohibiting trade in dual-use items (Xinhua). Targeted names include General Dynamics (GD), L3 Harris Technologies and Intelligent Epitaxy Technology. Also added 10 US firms to the unreliable entities list for selling arms to Taiwan (Xinhua). Companies include Lockheed Martin Missiles and Fire Control, Lockheed Martin Aeronautics and Lockheed Martin Missile System Integration Lab. Separately, US Commerce Department said it is considering new restrictions on China-made drones including a ban in US citing national security concerns (Reuters). Public comment period to conclude by 4-Mar and a decision will be left to the incoming Trump administration.

  • China to include smartphones, electronics to trade-in program:

    • Bloomberg cited an NDRC briefing announcing an expansion to the consumer product trade-in program to include smartphones and other electronics such as tablets and smartwatches. The move is part of efforts to encourage consumption to offset the effects of any new US tariffs on Chinese exports. Follows elevated priority on boosting consumption and domestic demand at the CEWC. NDRC added ultra-long special treasury bond issuance will be increased "significantly" to fund the program. The government in July earmarked CNY300B ($41.1B) of proceeds from special treasury bond issuance to support the trade-in scheme. Noted the initiative proved effective in boosting sales of cars and home appliances from September. For business demand, coverage will also be expanded to include areas including agricultural facilities. Article recalled that mobile phones were previously subsidized in 2007 to counter the impact of the global financial crisis. That program also included home appliances, computers and cars, running until 2013.

  • Notable Gainers:

    • +10.7% 009830.KS (HANWHA SOLUTIONS): Reportedly a beneficiary of US solar tariffs on Chinese firms

    • +8.7% 9896.HK (MINISO Group Holding): Partnership with "Black Myth: Wukong"

    • +6.2% 1810.HK (Xiaomi): Targets 300K SU7 deliveries in 2025

  • Notable Decliners:

    • -6.0% 000063.CH (ZTE): Bytedance denies rumors of firm working with ZTE's Nubia on AI smartphone

    • -5.7% 20.HK (SenseTime Group): Cuts back on Singapore office space

    • -4.9% 010620.KS (HD Hyundai Mipo): Guidance

• Data:

  • Economic:

    • Singapore November

      • Retail sales y/y (0.7%) versus +2.4% in prior month

  • Markets:

    • Nikkei: Closed

    • Hang Seng: 136.95 or +0.70% to 19760.27

    • Shanghai Composite: (51.13) or (1.57%) to 3211.43

    • Shenzhen Composite: (50.58) or (2.65%) to 1856.46

    • ASX200: 49.30 or +0.60% to 8250.50

    • KOSPI: 42.98 or +1.79% to 2441.92

    • SENSEX: (362.39) or (0.45%) to 79581.32

  • Currencies:

    • $-¥: (0.35) or (0.23%) to 157.1570

    • $-KRW: +0.03 or +0.00% to 1469.5400

    • A$-$: +0.00 or +0.14% to 0.6212

    • $-INR: (0.02) or (0.02%) to 85.7719

    • $-CNY: +0.01 or +0.12% to 7.3080