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StreetAccount Summary - Asian Market Recap: Nikkei (1.83%), Hang Seng +1.83%, Shanghai Composite +2.54% as of 03:10 ET

Jan 14 ,2025

• Synopsis:

  • Asia equities ended mixed Tuesday: Strong gains in Greater China on Trump tariff story with Shenzhen gaining the most; South Korea, Taiwan and Australia pared Monday's losses. Some losses in Southeast Asia but India seeing a modestly positive day. US futures higher, Europe opened with strong gains. US dollar lower on staggered tariffs idea; NZD notably higher, gains muted elsewhere, rupee at another record low. Treasuries mixed, JGB yields higher with the long-end reaching new record highs. Crude blends lower but still hovering near five-month high. Precious metals mixed; iron ore and copper futures higher amid declining dollar, tariff story.

  • Asia stocks bounced back Tuesday amid a more positive sentiment following a rally in US stocks overnight, positive US futures, and reports Trump's economic team was considering staggering tariffs on a month-to-month basis. A later economist report hinted that this being 'problematic' for the Fed but markets took the idea as a positive for now.

  • A quiet day for bonds and currencies despite the slightly better sentiment. The yen failed to respond to comments from BOJ Deputy Governor Himino who said a rate hike will be discussed next week although he also acknowledged timing difficulties amid risks. Australian consumer confidence eased amid lingering concerns over economy. New Zealand firms turned more optimistic. India retail inflation cooled by more than expected amid decline in food prices while wholesale prices accelerated. China new loans rose to CNY 990B in December from November's CNY 850B as credit demand improved marginally although was down on a y/y basis.

  • CATL (3000750.CH) has reportedly hired advisory banks ahead of its Hong Kong IPO sometime in the first half of 2025. Sunac China (1516.HK) said it has support from holders of nine out of ten onshore bonds for its debt restructuring plan.

• Digest:

  • Trump team exploring gradual tariff hikes, Biden administration announces AI chip restrictions:

    • Bloomberg sources said members of the Trump team discussing phased tariff increases month by month aimed at boosting negotiating leverage while helping to avoid a spike in inflation. One idea would schedule hikes of about 2% to 5% per month and rely on executive powers under IEEPA. Article noted proposal in early stages and has not yet been present to Trump. Separately, Biden administration announced additional restrictions on AI chip and technology exports (Reuters). Framework consistent with the Bloomberg leak, dividing global markets into three tiers. Most of the attention fell on Nvidia (NVDA) which called the rules "sweeping overreach" and said the White House would be clamping down on "technology that is already available in mainstream gaming PCs and consumer hardware." Analyst and investor takeaways raised concerns about the revenue outlook with estimates of up to half of Nvidia chips currently destined for restricted markets (Reuters). According to corporate filings, 56% of revenue derived from customers outside US with China accounting for about 17%. Additionally, Reuters sources indicated a USTR probe found China uses unfair policies and practices to dominate the global maritime, logistics and shipbuilding sectors. Article suggested this could be used to help pave the way for tariffs or port fees on China-made vessels.

  • BOJ's Himino says board members to discuss rate hike next week:

    • In a speech, BOJ Deputy Governor Himino said board members will discuss a rate hike at next week's policy meeting. However, underlying discussions pointed to ongoing uncertainties and acknowledged difficulties in judging the right timing. Section on monetary policy conduct began with Japan's ongoing negative real rates and debated how long this might last, drawing no conclusions. Argued that many contributing shocks and deflationary factors have been resolved, though shrinking population and globalization stand as major structural headwinds. Also suggested actual inflation must moderate and inflation expectations must rise, converging on 2%, in order to achieve the price stability target. Conceded this is a difficult path but so far sees developments heading in the right direction. If outlook remains on track, BOJ will continue to raise rates. Looking ahead, Himino hopes to see strong wages hikes in FY25, recalling encouraging messages from corporate leaders in their New Year ceremonies. Heard many positive reports at the recent branch managers meeting. Pointed to Trump's inaugural address next week to provide clarity on US policy direction. In the meantime, cited many upbeat views on US growth outlook in contrast to bearish narrative around August last year.

  • China loans accelerate in December:

    • China's banks extended CNY 990B in new loans in December, higher than November's CNY580B and consensus forecast of CNY850B. Analysts said surge was result of increased bond issuance, more credit support as part of stimulus package. On y/y basis, figure below CNY1.17T in Dec-23. Total social financing rose to CNY 2.860T versus CNY2.34T in November, estimates of CNY2T. New loans on a full-year basis declined for first time since 2011. FY loans totaled CNY18.09T ($2.47T) versus expectations of CNY17.78T but lower than 2023's total of CNY22.75T, first such y/y decline since 2011, according to Bloomberg. Also on FY basis, aggregate financing rose CNY32.26T versus CNY 35.59T in 2023. Analysts cited by Bloomberg said policymakers need to roll out more assertive policies to help domestic demand recover this year, PBOC likely to be keeping monetary policy tools in reserve in event of trade tariff shock from Donald Trump.

  • JGB market sentiment skewed to higher yields:

    • Nikkei discussed broad elevation in JGB yields Tuesday with 10-year trading up to 1.250% Tuesday, highest since Apr-11. Momentum primarily attributed to US yields following the stronger than expected employment data and JGB market catching up with Treasury price action after the Japan long weekend. Also cited thoughts that Trump policy uncertainties dampening buying interest in Treasuries and leading to increase in term premia with the main takeaway that downside risks to US yields seem limited. Domestic factors also in play as spillover momentum has increased OIS-implied odds for a BOJ rate hike next week at around 60% Tuesday from 40~50% last week. Also noted Bloomberg's report regarding possible upward revisions to BOJ inflation forecasts gained traction, as well as interpretations the BOJ branch managers meeting contained some meaningfully bullish evidence on wage hikes. Furthermore, hawkish takeaways from Deputy Governor Himino's speech saw remarks leaving open the possibility of a rate hike next week.

  • StreetAccount Event Preview: Bank of Korea policy meeting, 16 January:

    • Bank of Korea will announce policy decision Thursday with economists widely expecting 25 bp cut to 2.75% following consecutive cuts in October and November (Reuters). Pressing on BOK to trim, domestic activity data indicates slower economic growth, political uncertainty following failed martial law declaration has also hurt business and consumer sentiment. Further, housing market indicators slowed along with deceleration in household debt. External support from exports set to fade further as chip cycle turns, tariffs against China potentially worsen. Won continues to deteriorate with BOK active in December in providing support. Cut also flagged by BOK's policy outlook statement, Governor Rhee's New Year's speech. On counter side of MPC debate will be hawkish tilt by Fed on concerns over Trump's tariff policies, very recent spike in crude prices. Inflation below BOK target but ticked higher in October and November close to BOK target. Consumer sentiment will also be countered by looser fiscal policies, although these still have to be approved by government.

  • Notable Gainers:

    • +13% 9863.HK (Zhejiang Leapmotor Technology): guides FY revenue and sales volume 293,724 units vs year-ago 144,155 units

    • +7.7% 6160.HK (BeOne Medicines): participates in annual JP Morgan Healthcare Conference; expects to achieve positive operating income for full year 2025

    • +6.4% 3349.JP (COSMOS Pharmaceutical): reports H1 earnings ahead of guidance

    • +4.7% 7453.JP (Ryohin Keikaku): reports Q1 earnings ahead of FactSet estimates; raises FY guidance

    • +4.1% 2269.HK (Wuxi Biologics (Cayman)): provides business update; reports 151 new projects in 2024

    • +1.6% 8766.JP (Tokio Marine Holdings): president Satoru Komiya reportedly to become chairman

    • +1.2% 207940.KS (Samsung Biologics): signs KRW2.075T pharmaceutical manufacturing contract with European pharmaceutical company

    • +0.9% 7974.JP (Nintendo): podcast reports Nintendo to reveal Switch 2 16-Jan

  • Notable Decliners:

    • -4.3% 6506.JP (YASKAWA Electric): reports Q3 earnings; analysts broadly note that operating profits and orders fell short due to weak demand in key markets, particularly South Korea, Europe, and the US

    • -1.2% 136.HK (China Ruyi Holdings): acquires 30% stake in Beijing Yonghang Technology from Tencent for total consideration of CNY825M

    • -1.1% 5401.JP (NIPPON STEEL): US Steel confirms extension for regulatory review of merger with Nippon Steel; Cleveland-Cliffs reportedly partners with Nucor in potential bid for US Steel

• Data:

  • Economic:

    • Japan

      • December bank lending +3.1% y/y vs revised +2.9% in prior month

      • November current account balance ¥3,352.5B vs consensus ¥2,652.5B and ¥2,456.9B in prior month

    • Australia

      • January Westpac-MI consumer sentiment index 92.1 vs 92.8 in December

  • Markets:

    • Nikkei: (716.10) or (1.83%) to 38474.30

    • Hang Seng: 345.64 or +1.83% to 19219.78

    • Shanghai Composite: 80.19 or +2.54% to 3240.94

    • Shenzhen Composite: 77.39 or +4.21% to 1915.85

    • ASX200: 39.10 or +0.48% to 8231.00

    • KOSPI: 7.84 or +0.31% to 2497.40

    • SENSEX: 210.38 or +0.28% to 76540.38

  • Currencies:

    • $-¥: (0.06) or (0.04%) to 157.4230

    • $-KRW: (6.54) or (0.45%) to 1459.8400

    • A$-$: +0.00 or +0.38% to 0.6202

    • $-INR: (0.07) or (0.08%) to 86.5827

    • $-CNY: (0.00) or (0.02%) to 7.3300