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StreetAccount Summary - Asian Market Recap: Nikkei +1.17%, Hang Seng +1.75%, Shanghai Composite +0.08% as of 03:10 ET

Jan 20 ,2025

  • Synopsis:

    • Asia equities ended mostly higher Monday: Hang Seng ended at three-week high after internet & IT stocks rose sharply, Shanghai and Shenzhen also saw solid gains. Technology-dominated boards in Japan and Taiwan stronger. Australia ended higher, Southeast Asia mostly up and India is also trading higher as its financial stocks surge. South Korea's Kospi ended lower. US futures slightly higher (although markets closed today), Europe slightly higher in early trades. US dollar noticeably weaker, yen and yuan slightly stronger. Treasury yields marginally higher. Crude oil unchanged, precious metals mixed, industrial metals also mixed. Cryptocurrencies spiked substantially in afternoon Asia trade with bitcoin reaching record high.

    • Stocks largely higher Monday to follow through from Friday's positive momentum on Wall Street with technology names outperforming. Hong Kong stocks boosted by reports a conversation between President-elect Trump and President Xi went smoothly while a separate meeting between China VP Han and his counterpart Vance also ended on an optimistic tone.

    • Separately Monday, China kept 1Y and 5Y LPRs unchanged as expected with muted market response. Elsewhere, the Bank of Korea lowered its FY 2025 economic growth projection to 1.6-1.7% from 1.9% in November, and warned that growth path was dependent on political stability returning. Meanwhile, President Yoon was formally arrested over the weekend but the president remained defiant over questioning by anti-corruption officials. Japan's machinery orders rose versus an expected decline; Malaysia's exports rose to a more than two-year high.

    • In corporate news, China officials are said to be taking steps to stabilize operations at China Vanke (2202.HK) as doubts over liquidity stress, whereabouts over its CEO spread. Country Garden (2007.HK) has been given more time by a Hong Kong court to reach an agreement with creditors, saying it thinks it can reach an agreement by February. New World Development (17.HK) denied it was in talks for holistic debt restructuring. Daiichi Sanyo (4568.JP) said its breast cancer treatment developed alongside AstraZeneca had won US FDA approval. Korea Zinc (010130.KS) said country's pension service will support chairman's proposal on cumulative voting, boosting defense of company against PE takeover attempt. Star Entertainment (SGR.AU) said its future as a viable business was in doubt as it had 'limited' ability to raise A$150M of subordinated debt.

  • Digest:

    • Trump had constructive call with Xi:

      • Nikkei discussed President-elect Trump's phone call Friday with China President Xi. Cited Trump's post on Truth Social describing the conversation as "very good" for both sides. Added they discussed "trade, Fentanyl, TikTok and many other subjects." CCTV cited Xi as saying he was hopeful for a good start to bilateral relations under the new presidency. Xi added there will be inevitable differences, but respect is key to respective core interests. Reiterated the Taiwan question concerns China's sovereignty and US needs to approach it with "prudence." Also said trade relations should be based on mutual benefit and not on conflict, a reference to sweeping tariffs on Chinese imports Trump promised during his election campaign. Xinhua cited a WSJ report in which sources said Trump has told advisers he wants to visit China after he takes office. Expressed interest in making a trip in his first 100 days though no decision has been made. TikTok also in the headlines (Reuters), temporarily halting services late Saturday with the legal ban taking effect Sunday, though later restored after Trump said he would grant an extension when he takes office.

    • China LPRs unchanged, though rate cuts seen coming soon:

      • LPRs were unchanged at 3.10% in 1-year and 3.60% in 5-year in line with expectations, keeping policy rates steady for the third straight month. Attention relatively light with a pause generally attributed to yuan weakness and depressed bond yields. Recall that latest policy rhetoric has emphasized commitment to yuan stability. Yet, economists expect imminent monetary easing on the back of recent policy guidance -- Politburo shifted policy stance to "moderately loose" from "prudent." Moreover, PBOC Governor Pan in October signaled a potential RRR cut by year-end which did not materialize. Subsequent MPC meeting maintained a dovish tone and indicated rate cuts including RRR will be implemented at an "appropriate time." Some thoughts RRR cut may come first, perhaps before Lunar New Year holidays, with policy rate cuts after the NPC in March. China facing usual ramp in liquidity demand ahead of LNY. PBOC last week injected the second-highest amount of liquidity in seven-day OMOs on record going back to 2004, aimed at offsetting expiring MLF loans, tax-related drains and seasonal holiday demand.

    • Bank of Korea cuts FY growth outlook, President Yoon formally arrested over martial law decree:

      • Bank of Korea Monday lowered its South Korea's FY GDP growth outlook to 1.6-1.7% from November's 1.9%. Said trim due to weak domestic demand that stems from political crisis that began in December after President Yoon's declared martial law. Bank flagged last week weaker consumer sentiment, construction investment having a negative impact on growth; path from here dependent on political crisis subsiding. If realized, sub-2.0% growth rate would be first time country's GDP growth fallen below potential growth rate (Yonhap). Meanwhile, President Yoon formally arrested Sunday after court issued warrant to detain him for extended period. Yoon may be kept in custody for up to 20 days, will be transferred to prosecution after ten days from corruption investigation office (CIO), but likely to be charged before this period expires (Yonhap). President continues to defy orders from CIO to appear for questioning, CIO official said it is 'strongly considering' bringing Yoon in for questioning by force.

    • BOJ majority likely to support rate hike this week:

      • Nikkei front-page article Saturday cited multiple sources indicating majority of BOJ board members likely to support a rate hike this week. Some members said to be cautious, and decision apparently hinging on market impact from Trump's inauguration. But underlying US macro risks appear to have diminished. Follow-up article discussed the lead-up, citing government sources that saw BOJ testing markets with Deputy Governor Himino's remarks flagging a rate hike to be discussed at the next MPM. Rate hike now 82% priced in as of Friday afternoon compared with around 40% at year-end. BOJ placing greater attention on market communication and impact after prior disruptions, learning lessons from the July rate hike. BOJ source reflected back on the episode, conceding they had underestimated the fallout as markets were skeptical of a move and speculators built up short yen positions despite BOJ signals from April that policy adjustments would continue if economic developments continued to track their forecasts. BOJ/market misalignment persisted around the December MPM that drew dovish takeaways and yen selling. Article noted BOJ signaling less clear than Fed, though BOJ under less pressure for policy changes. BOJ challenged by increasing clarity without sacrificing flexibility.

    • StreetAccount Event Preview: Monetary Authority of Singapore policy meeting, 24 January

      • Monetary Authority of Singapore's (MAS) scheduled to set its monetary controls this Friday, with several analysts forecasting a modest ease to policy via reduction in slope of its SGD policy band, influencing pace at which SGD can weaken, but will maintain appreciative stance. Adjustment of band's mid-point or width highly unlikely. Singapore dollar weakened alongside other Asia currencies in Q4 and YTD 2025 with analysts cited by Bloomberg suggesting SGD's nominal effective exchange rate (S$NEER) may have slipped to middle of MAS's policy band. Meanwhile, core inflation moved to below target 2% in November; combination of weakened S$NEER, lower inflation gives MAS opportunity to ease policy slightly they said. Added inflation data due Thursday will be important influencer on decision. MAS also cognizant Singapore economy heavily dependent on trade, especially China trade, may want to pre-emptively ease policy to soften impact of deeper trade tariffs on China exports.

    • Notable Gainers:

      • +8.2% 4568.JP (Daiichi Sankyo): acquires intellectual property rights for Anti-TA-MUC1 antibody in DS-3939 from Glycotope

      • +7.7% 6069.HK (SY Holdings Group): guides FY profit more than +30% y/y

      • +5.0% 001570.KS (KUM YANG): withdraws plans for paid-in capital increase via rights share offering

      • +1.9% 8591.JP (ORIX): to sell Greenko Energy Holdings to AM Green Power B.V for $1.46B (¥228.55B)

      • +1.1% 011070.KS (LG Innotek Co.): reports FY earnings with revenue ahead of StreetAccount estimates

    • Notable Decliners:

      • -7.9% 267260.KS (HD Hyundai Electric): reports Q4 operating profit KRW166.3B vs FactSet KRW224.76B

      • -7.9% 688126.CH (National Silicon Industry Group): guides FY net income attributable (CNY840.0M-1.00B) vs FactSet (CNY439.4M)

      • -2.5% 600438.CH (Tongwei): guides FY net income attributable (CNY7.00-7.50B) vs FactSet (CNY5.24B)

      • -2.3% 051900.KS (LG H&H): reports FY earnings; analysts broadly agree Q4 operating profit missed expectations

      • -1.2% 010130.KS (Korea Zinc Co.): National Pension Service to support Korea Zinc chairman Choi's proposal on cumulative voting

  • Data:

    • Economic:

      • Economic

        • Japan November

          • Core machinery orders +3.4% m/m vs consensus (0.8%) and +2.1% in prior month

    • Markets:

      • Nikkei: 451.04 or +1.17% to 38902.50

      • Hang Seng: 341.75 or +1.75% to 19925.81

      • Shanghai Composite: 2.56 or +0.08% to 3244.38

      • Shenzhen Composite: 18.61 or +0.97% to 1934.79

      • ASX200: 37.00 or +0.45% to 8347.40

      • KOSPI: (3.50) or (0.14%) to 2520.05

      • SENSEX: 567.88 or +0.74% to 77187.21

    • Currencies:

      • $-¥: (0.23) or (0.15%) to 156.0790

      • $-KRW: (10.95) or (0.75%) to 1447.6100

      • A$-$: +0.00 or +0.43% to 0.6219

      • $-INR: (0.05) or (0.05%) to 86.5339

      • $-CNY: (0.01) or (0.16%) to 7.3133

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