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StreetAccount Summary - Asian Market Recap: Nikkei (1.05%), Hang Seng (0.92%), Shanghai Composite (1.33%) as of 03:10 ET

Jan 10 ,2025

• Synopsis:

  • Asia equities weaker almost everywhere Friday. Singapore worst off amid a selloff in banks following record highs this week. Japan's two major benchmarks also steeply lower, greater China markets ended all lower with some falling through key technical support levels. Australia down but off its trough. Kospi and Taiex down late on, Southeast Asia lower except Jakarta, which is the sole positive benchmark; India now lower after a bright start. US futures pointing to a negative open, Europe a few points down. US dollar flat, AUD and NZD skirting with three-year lows again, yen and yuan unchanged. Crude blends, precious metals higher, industrial metals again mixed. Cryptocurrencies regaining some poise.

  • Asia markets fell for a third consecutive day Friday amid persistent strength in the US dollar and deepening concerns over the recovery of the China economy. Beijing today took another step to defend the yuan, still hovering at 16-month lows, by suspending the buying of government bonds, to add to the issuance of yuan denominated bills Thursday and stronger-than-expected daily fixing points. CGB yields rallied a little from their record lows below 1.6% on the news while the onshore and offshore yuan traded flat. China equities were weak: the CSI 300 traded below its 200-day moving average while the Hang Seng fell below its Nov-24 lows.

  • Elsewhere, newsflow was light. Japan household spending fell for a fourth consecutive month, Australia November retail sales were better than forecast and versus October, Taiwan exports grew more than 9% y/y to easily beat consensus, Malaysia industrial output hit a three-month high. Ahead, China credit data due from Friday evening onward, US non-farm payrolls later this evening.

  • Apollo Global Management is considering taking a 'substantial' stake in a bid by Seven & i's (3382.JP) founding family's bid to take the company private. Country Garden (2007.HK) said it has reached an understanding with key creditors on a plan to reduce its offshore debt by $11.6B. Sunac China (1918.HK) has received a liquidation petition from China Cinda AM just days after saying it would not make a Sep-25 deadline on a bond maturity. TSMC (2330.TT) said quarterly sales topped estimates in a boost for AI's outlook in 2025.

• Digest:

  • PBOC temporarily halts purchases of government bonds:

    • PBOC said it would suspend buying treasury bonds in open market from January given recent persistent shortages of supplies, Added it will pick a time to resume buying depending on market conditions. Came after benchmark yields slid to all-time low earlier this month, which Bloomberg said driven by growing monetary easing bets to revive sluggish economy and demand for haven assets. Investors rush to government bonds amid prolonged property downturn, lackluster consumption and deflationary pressures. Plunging bond yields further weighed on yuan, which fell to 16-month low against dollar this week. Recall authorities had repeatedly warned about one-way buying in bond market in 2024 and PBOC started regular bond transactions with primary dealers in August, purchasing net CNY1T($136B) of sovereign notes for five straight months through December. PBOC-affiliated FinancialNews citing economists said markets have excessively priced in effect of "moderately loose monetary policy". CGB yields rose across curve on Friday while offshore yuan edged up too.

  • Apollo looking to commit $9.5B for stake in Seven & i founding family buyout:

    • Bloomberg, citing people familiar with the matter, reported Apollo Global Management (APO) is considering a commitment of up to JPY1.5T ($9.5B) equity stake in the Seven & i (3382.JP) founding family's buyout plan. Apollo would join the Ito family and Itochu (8001.JP) as key investors which are mulling stakes of around JPY500B and more than JPY1T respectively. Equity stakes would total about JPY4T with the remaining financing to come from Japan megabanks. Original valuation was for JPY9T, above the JPY7.5T bid from Alimentation Couche-Tard (ATD.CN), though may be revised down as current market cap is notably lower at around JPY6.3T. Other details still under negotiation. Follows remarks Thursday by Seven & I CFO Yoshimichi Maruyama revealing the board is still considering takeover proposals by Couche-Tard and the Ito family, though doesn't have enough information to evaluate them. Article cited thoughts the development raises the possibility of a buyout going ahead or may attract higher bids by other investors.

  • Japan household spending extends declines:

    • Household spending fell 0.4% y/y in November, narrower than an expected 0.9% decline. Follows 1.3% slide in the previous month, marking the fourth straight negative reading. Weakness mitigated by sharp increases in housing and education (university tuition). Dining also provided some support. Notable drags came from white goods and accommodation. Real spending declines masking consistent growth in nominal terms with spending up 3.0% y/y for the tenth straight increase. Similarly, real income growth of 0.7% compares with nominal 4.1% growth with main breadwinner salaries up 4.7%. Recall earlier wage data also showed a similar contrast as base wages expanded at the fastest pace in 32 years while aggregate real earnings remained in decline. Deflator factor consistent with prevailing narrative that cost-of-living pressures subduing consumer sentiment, translating to anemic private consumption. BOJ consumption activity index edged up 0.2% m/m, reversing a 0.2% decline in the prior month, marking the first rise in four months. Rebound in non-durables spending marginally outweighed a similar decline in durables, while services were steady. This leaves Q4 on a marginally softer trajectory (first decrease in three quarters), posing negative implications for GDP.

  • US to finalize China auto crackdown next week:

    • In a Reuters interview, US Commerce Secretary Raimondo said the outgoing Biden administration plans to finalize restrictions on Chinese vehicle software and hardware next week. Proposal was announced in September, aimed at prohibiting Chinese technology in connected vehicles in US due to national security concerns, in a move that would effectively ban China-made cars and trucks. White House cleared the final rule late Tuesday. Original proposal would make software prohibitions effective in the 2027 model year while hardware ban would take effect in 2029. Separately, CPCA published 2025 estimates that China auto exports would slow sharply to 10%, following 25% growth in 2024 (Reuters). Cited expected drop in shipments to Russia, adding to tariff pressure in Europe. Notably, NEV export growth expected to stall to zero from 24.3% last year. Industry group was more bullish on domestic demand with total car sales seen rising 2% with NEVs growing 20% to make up 57% of the aggregate. Follows 5.3% and 40.7% growth respectively in 2024. Auto trade-in subsidy program cited as a key tailwind.

  • Notable Gainers:

    • +15.1% 4530.JP (Hisamitsu Pharmaceutical): reports Q3 results with +9% operating profit growth year-on-year; raises FY guidance

    • +6.1% 005380.KS (Hyundai Motor): partners with NVIDIA to accelerate development of AI Solutions for future mobility

    • +6.0% 3008.TT (LARGAN Precision): reports Q4 earnings ahead of FactSet estimates; reportedly sees better operation momentum in Jan-Feb y/y; guides FY capex NT$10.7B

    • +5.9% 532540.IN (Tata Consultancy Services): reports mixed Q3 results with flat revenue growth, modest margin expansion, and headcount declines

    • +4.9% 3382.JP (Seven & i): Apollo reportedly looking at committing ¥1.5T ($9.48B) for stake in Seven & i's founding family's buyout

    • +3.0% 2899.HK (Zijin Mining Group): Zangge Mining largest and second largest shareholder to sell total of 24.7% stake to Zijin Mining

  • Notable Decliners:

    • -40.6% 2013.HK (Weimob): Tencent disposes 184.0M shares on open market

    • -26.3% 1918.HK (Sunac China Holdings): China Cinda Asset Management files winding-up petition against Sunac China in Hong Kong

    • -6.5% 9983.JP (FAST RETAILING): reports Q1 earnings; analysts widely highlight Europe and North America as key growth drivers, while Greater China faces profitability issues due to both external factors and internal execution gaps

    • -4.9% 8905.JP (AEON Mall): reports 9M earnings; net income attributable declines (17%) year-on-year

    • -1.4% 6146.JP (DISCO Corp.): reports preliminary Q3 non-consolidated sales

• Data:

  • Economic:

    • Japan November

      • Household spending (0.4%) y/y vs consensus (0.9%) and (1.3%) in prior month

        • Spending +0.4% m/m vs +2.9% in prior month

      • Leading economic index 107.0 vs consensus 107.2 and 109.1 in prior month

        • Coincident index 115.3 vs consensus 115.3 and 116.8 in prior month

  • Markets:

    • Nikkei: (414.69) or (1.05%) to 39190.40

    • Hang Seng: (176.60) or (0.92%) to 19064.29

    • Shanghai Composite: (42.87) or (1.33%) to 3168.52

    • Shenzhen Composite: (41.65) or (2.22%) to 1837.28

    • ASX200: (35.10) or (0.42%) to 8294.10

    • KOSPI: (6.12) or (0.24%) to 2515.78

    • SENSEX: 55.74 or +0.07% to 77675.95

  • Currencies:

    • $-¥: +0.04 or +0.03% to 158.3990

    • $-KRW: +6.16 or +0.42% to 1464.3500

    • A$-$: (0.00) or (0.38%) to 0.6192

    • $-INR: +0.00 or +0.00% to 85.9131

    • $-CNY: 0.00 or 0.00% to 7.3317