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StreetAccount Summary - Asian Market Recap: Nikkei (1.47%), Hang Seng (0.36%), Shanghai Composite (0.14%) as of 03:10 ET

Jan 06 ,2025

• Synopsis:

  • Asia equities ended mixed Monday. A very strong day in Taiwan and South Korea as chip stocks jumped. Singapore also higher while Australia was a few points higher. On the downside, Japan stocks lagged, more losses for mainland China and the Hang Seng also lower today. US futures positive, Europe opened higher. US dollar flat, some strength in the AUD, but yen and yuan weaker again. Treasury yields higher across tenors, Asia sovereign yields mostly higher, JGB yields gained, CGBs back at record lows. Crude, precious metals and industrials all lower. Cryptocurrencies gaining with bitcoin challenging $100K again.

  • Asia markets polarized Monday with some mark-to-market movement in Japan after a four-day break, technology stocks leading in Taiwan and South Korea, and China stocks continuing their wobbly start to the year. Japan's 10Y JGB yield rose to almost 1.13%, its highest since July 2011 just as BOJ Governor Ueda today reminded bankers the BOJ would raise policy rates if economic conditions deemed it necessary. The Topix and Nikkei fell sharply with auto stocks under pressure after December sales data disappointed some, and drinks companies fell on US authorities plan to warn on health affects from alcohol. Taiwan's Taiex gained as TSMC reached a fresh record high, and Hon Hai beat on results.

  • PBOC fixed the yuan at 7.1876 per dollar but both the onshore and offshore yuan weakened again today with PBOC considering the issue of yuan-denominated bills to curb speculation. South Korea's won weakened again today with no end in sight to the country's political turmoil; today, the anti-corruption office asked the police to detain President Yoon after failing to do so on Friday. Japan's service PMIs revised lower, China Caixin composite PMI fell to three-month low but services index rose to seven-month high; India's Services PMI also revised lower. Vietnam's FY 2024 GDP grew 7.1% y/y while separate data showed industrial output at five-month high.

  • Nippon Steel's (5401.JP) takeover bid for US Steel was formally blocked by President Biden, is said to be preparing a lawsuit against the US government saying decision was political; rival steelmaker Cleveland-Cliffs CEO reportedly accused of casting doubt on deal to investors, according to a Reuters report. Toyota Motor (7203.JP) posted a 3% rise in US sales over 2024 on demand for its hybrid models. Xpeng (9868.HK) and Volkswagen are to share each other's ultra-fast EV charging network in China in an expansion of their current partnership. CC Capital Partners has offered A$2.9B to buy Insignia Financial (IFL.AU).

• Digest:

  • PBOC may issue more yuan bills to curb speculation, local media reports:

    • PBOC may issue more yuan bills in Hong Kong over January in signal Beijing looking to absorb currency and dampen speculative yuan trading, Yicai reported Monday citing source at PBOC. Move response to strong demand for high-grade yuan-denominated bonds by overseas investors, will be newly issued this time and not bills rolled over on maturity. Yuan fell to 16-month low Monday after falling through long-held CNY7.3 per dollar late last week. Falling sovereign bond yields partly to blame for yuan's problems; today, 10Y CGB yield fell through 1.60% for first time despite PBOC Friday warning fund managers over pushing yields down, fearing bond bubble could cap Beijing's attempts at reviving growth. Meanwhile mainland stock markets fell to lowest since September Monday following 5-7% losses last week. Reuters reported Shanghai and Shenzhen stock exchanges recently met with foreign investors after mainland bourses to reassure them on capital market opening-up plans.

  • BOJ Governor Ueda reiterates hawkish bias, but with no new clues:

    • In a New Year's address to the Japan Bankers Association, BOJ Governor Ueda repeated the core signal that BOJ will raise rates if economic conditions continue to improve (Nikkei). Added that timing will depend on forthcoming macro/financial developments while stressing that various risk factors warrant attention. Also said Trump policies remain unclear ahead of the 20-Jan inauguration. Bloomberg discussion resumed the dovish-leaning narrative after BOJ left rates steady in December and Ueda's press conference drew interpretations that he did not seem to be in a hurry to hike this month. Yet, also recalled the latest Summary of Opinions contained some views that rates need to be lifted sooner rather than later. Looking ahead, article noted the next MPM set for January 23-24. No Ueda speeches scheduled until then, so focus will fall to Deputy Governor Himino's speech and press conference on 14-Jan. Recall that since the December meeting, some economists calling for a December move shifted to March while January forecasts were largely maintained.

  • PBOC maintains easing stance, signaling rate cuts at appropriate time:

    • Xinhua cited a PBOC statement following the quarterly MPC meeting, committing to implement various existing structural monetary policy tools. Pledged increased financial support for tech, emissions, pensions and digital spaces. Also signaled rate cuts including RRR will be implemented at an "appropriate time." Added central bank will guide financial institutions to increase credit supply and lower financing costs. Broader priorities for 2025 were discussed separately, emphasizing domestic demand growth and stabilizing sentiment (Xinhua). Reaffirmed a moderately loose policy stance. Also flagged the use of a mix of policy tools to lower RRR and other rates when appropriate in light of domestic and international economic and financial conditions and the operation of financial markets. Remains committed to maintain sufficient liquidity and steadily increase liquidity to meet growth targets in social financing and money supply. PBOC will keep yuan basically stable and forestall exchange rate overshooting risks.

  • China services activity expands at fastest pace in seven months:

    • Caixin services PMI was 52.2 in December, above consensus 51.7 and November's 51.5. Reading showed services activities in expansion since Jan-2023 and at highest since May. Incoming new work in growth for two years and at fastest rate in five months, supported by promotional efforts and better underlying demand. Higher domestic demand came in contrast with new export business, which declined for first time since Aug-2023. Outstanding work accumulated at fastest pace in last five months but remained marginal. However employment fell for first time since August despite capacity pressures as some firms cited cost concerns. Cost inflation rose due to rising input material and wage costs, marking first increase in three months. Selling prices were higher for first time since June. Business confidence eased to second-lowest since Mar-2020, just above September's level, as some expressed concerns over growing competition and negative outlook for international trade. Due to softer expansion in manufacturing output expansion, Caixin Composite PMI came at 51.4, down from November's 52.3, lowest since September.

  • Asia's forex reserves remain robust despite central bank intervention in forex markets:

    • Asia foreign reserve holdings remain strong according to latest year-end data despite many central banks active during Q4 in forex markets to support local currencies. South Korea foreign reserves did drop in Q4 to $415.6B as BOK stepped in to support won. But this was down just 1% y/y, with most losses in Q4 as won fell amid political turmoil, slowing export growth; BOK noted it was lowest year-end reading since 2019 (Yonhap). India's reserves fell to eight-month low $640.3B end-Dec, RBI forex support unable to stop rupee weakening to successive record lows last week (Reuters). Yet on y/y basis, reserves increased from $623.2B in Jan-24. Other 'dollar-exposed' countries also with robust reserves: Thailand from $224.5B in Jan-24 to 237.1B Jan-25; Indonesia from $146.4B to $150.2B; Philippines $103.8B to $108.5B; Malaysia $113.5B to $118.1B. Taiwan expanded most from $576.7B to $578.0B at end Dec.

  • Notable Gainers:

    • +6.5% 9204.JP (Skymark Airlines): Sojitz to acquire 5.0% stake on-market from UDS Airlines Investment

    • +6.3% 4186.JP (TOKYO OHKA KOGYO): issues mid-term plan 2027: guides FY27 revenue ¥270.0B vs FY24 guidance ¥193.40B

    • +3.7% 3008.TT (LARGAN Precision): reports December revenue NT$5.64B, +17.9% y/y

    • +1.9% 2317.TT (Hon Hai Precision Industry): reports December revenue NT$654.83B, +42.3% y/y

    • +1.4% 161390.KS (HANKOOK TIRE & TECHNOLOGY Co.): completes acquisition of 122.8M Hanon Systems shares for KRW1.216T; deal was announced 3-May

  • Notable Decliners:

    • -5.1% 2501.JP (Sapporo Holdings): US Surgeon General reportedly calls for warnings to be updated on alcoholic beverages regarding cancer risk

    • -2.0% 3380.HK (Logan Group): provides holistic restructuring proposal

    • -0.8% 5401.JP (NIPPON STEEL): US president Joe Biden confirms he is blocking company's acquisition of US Steel; company reportedly planning to sue US government based on content of CFIUS review, arguing decision was motivated by politics

• Data:

  • Economic:

    • China

      • December Caixin services PMI 52.2 vs consensus 51.7 and 51.5 in prior month

        • Caixin Composite PMI 51.4 vs 52.3 in prior month

    • Japan

      • December final services PMI 50.9 vs preliminary 51.4 and 50.5 in prior month

        • Composite PMI 50.5 vs preliminary 50.8 and 50.1 in prior month

  • Markets:

    • Nikkei: (587.49) or (1.47%) to 39307.05

    • Hang Seng: (71.98) or (0.36%) to 19688.29

    • Shanghai Composite: (4.51) or (0.14%) to 3206.92

    • Shenzhen Composite: (7.01) or (0.38%) to 1849.45

    • ASX200: 6.90 or +0.08% to 8257.40

    • KOSPI: 46.72 or +1.91% to 2488.64

    • SENSEX: (1,099.86) or (1.39%) to 78123.25

  • Currencies:

    • $-¥: +0.40 or +0.26% to 157.7070

    • $-KRW: (2.90) or (0.20%) to 1464.3000

    • A$-$: +0.00 or +0.24% to 0.6229

    • $-INR: +0.05 or +0.06% to 85.8176

    • $-CNY: +0.01 or +0.11% to 7.3286