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StreetAccount Summary - Asian Market Recap: Nikkei +1.58%, Hang Seng (1.63%), Shanghai Composite (0.89%) as of 03:10 ET

Jan 22 ,2025

  • Synopsis:

    • Asia equities ended largely higher Wednesday, ex China benchmarks. Strong gains for Japan's main boards, South Korea and Taiwan. Australia, most of Southeast Asia also higher, India flat after hitting seven-month low Tuesday. Singapore lower, Greater China also down, led by losses in Hong Kong. US futures higher led by Nasdaq, Europe opened higher. Dollar quiet, yen and yuan weaker. Treasury yields mixed, Asia sovereign yields lower. Crude blends under pressure. Precious metals continuing to move higher, industrial metals weak as copper fell sharply on tariff threat.

    • China boards giving up much of the week's gains after Trump said he may impose tariffs of 10% on Chinese goods from 1-Feb, just days after hinting he would delay new measures for up to three months. He also reiterated 25% tariffs on Mexican and Canadian imports while, today, the EU said it was preparing a 'proportionate response' to any US tariffs to protect the region's economic interests. Regional Asia technology firms benefited from a Trump's announcement of a $500B AI investment project, including Softbank, which gained almost 11% with several other AI-related names also trading higher.

    • In other developments, South Korea overall consumer morale improved in January but a sub-index covering domestic economic conditions dipped again. New Zealand Q4 inflation eased on a quarterly basis though yearly rate unchanged. Malaysia's central bank kept its base rate unchanged at 3.0%, as fully expected just as December headline and core inflation fell to multi-month lows.

    • CK Hutchison (1.HK) said it is fully cooperating with local authorities in Panama over a probe into its ownership of two ports adjacent to the canal, and reiterated its commitment to the business. The Shenzhen government and local state enterprises are combining to contain China Vanke's (2202.HK) debt risk on asset disposals, according to a Reuters report. Sunac China (1918.HK) announced its debt restructuring plan had been approved by creditors to become the first China developer to secure full restructure. Softbank (9984.JP) is set to oversee finances in the $500B AI infrastructure joint venture with OpenAI and Oracle, announced by President Trump.

  • Digest:

    • US-China relations off to a warm start, but Trump still discussing 10% tariff:

      • Press discussed the unexpectedly positive start to US-China relations on Trump's return to the White House. Bloomberg cited comments from China Vice Premier Ding Xuexiang in Davos that China wants to expand imports, trade surplus is not the goal while also touting greater efforts at opening up to foreign investment. China foreign ministry indicated sanctions on Secretary of State Rubio would not impact official dialogue (Bloomberg). Follows Trump's inauguration which largely avoided criticism of China. However, Trump said 10% China tariff still being discussed alongside 25% levies on Mexico and Canada citing fentanyl shipments (Reuters). Reuters also discussed the positive start, noting Trump also delayed the TikTok ban though suggested US should own 50% of US operations in return for keeping the app alive. Still, as Trump signed an executive order to postpone the TikTok ban by 75 days, warned that he could impose tariffs on China if Beijing did not approve a US deal (Reuters). In Trump's second term, analysts say Beijing and Washington need a new roadmap to advance goals and protect interests, noting previously unresolved issues such as the 2020 trade deal could pose a complication. Cited perceptions that Trump is seeking a deal, though it is yet unclear what Beijing might offer in return.

    • President Trump announces Stargate AI infrastructure venture:

      • President Trump announced a $500B AI infrastructure JV called Stargate to be funded by the private sector (CBS). Leaders from OpenAI, SoftBank (9984.JP) and Oracle (ORCL) attended the White House briefing. Trump indicated he would use emergency declarations to facilitate construction. Executives expected to commit $500B into the program over four years. Oracle CEO Ellison said 10 data centers for the project were already under construction in Texas, and that more were planned. Sources indicated Stargate would start with a data center project in Texas and eventually expand to other states. OpenAI statement noted SoftBank responsible for financials and OpenAI to oversee operations. Arm (ARM), Microsoft (MSFT), Nvidia (NVDA), Oracle, and OpenAI mentioned as key initial technology partners. Bloomberg source said Stargate draws from SoftBank CEO Son's previous pledge for $100B investments during a Mar-a-Lago visit last month. Son clarified at the briefing the $100B would be deployed "immediately" and is separate from the $500B Stargate figure (Nikkei). Bloomberg piece noted skepticism about whether Stargate constitutes a major increase from prior plans and Son's announcement raised questions about funding.

    • ByteDance reportedly budgeting $12B for AI chips this year:

      • FT sources said ByteDance planning to spend more than $12B on AI infrastructure this year amid growth headwinds from US pressure to sell TikTok. ByteDance spokesperson dismissed the report as incorrect (Reuters). Company said to have budgeted CNY40B ($5.5B) to buy AI chips in China, double last year's outlays. Also plans to invest about $6.8B overseas to bolster foundation model training capabilities using advanced Nvidia (NVDA) chips. About 60% of domestic chip orders to go to Chinese suppliers such as Huawei and Cambricon. Remainder to be spent on Nvidia chips which was diluted to align with US export controls. Beijing said to have issued informal guidance to Chinese tech firms to buy at least 30% of chips from domestic suppliers. Article suggested offshore allocation could face challenges from latest US export controls. US President Trump's call for 50% US ownership of TikTok could affect a future ByteDance IPO with the company valuing itself at $300B during a recent buyback program. Report noted AI budget was formulated before recent US interventions. Chinese companies said to have maintained access to Nvidia chips through rental agreements with third-party data center providers before latest export rules closed the loophole. Outlook for future procurement is uncertain and depends on Trump's stance.

    • Uncertainty surrounding scope of Trump tariffs and implementation timeline:

      • Volley of tariff headlines following Trump's inauguration leaving markets guessing on several aspects, particularly scope and implementation timeline. Economists see tariffs going ahead, though in gradual and stepwise manner. Morgan Stanley said its base case remains for immediate tariff announcements but slow implementation with China effective tariff rate rising from 10% to 15% by end of Q1 and 26% by end-2025. Similarly, Nomura anticipates China tariffs to be implemented in three phases though in more gradual and successive approach than in 2018/19 when they were levied in four tranches. Also expects tariffs to be broader than in 2018/19 and extend to consumer goods not currently subjected to tariffs. Beyond China, sees Trump imposing 10% tariffs on most European and Asian nations beginning in mid-2025 with Mexico subject to 5% tariffs, introduced gradually over two tranches. Goldman Sachs took more sanguine view, lowering its odds of universal tariff rate to 25% following Trump's inauguration day comments. If one is announced, Goldman expects any universal tariff to be targeted to critical imports.

    • Markets seen tame enough for BOJ to hike Friday:

      • Bloomberg discussed indications that markets see post-Trump inauguration volatility as calm enough for BOJ to proceed with a rate hike Friday. Recalled sources said BOJ officials saw a good chance of a hike this week provided Trump did not present too many negative surprises. Other sources indicated after the inauguration that government officials will also acquiesce to an increase. Article noted yen has weathered Trump's first days in office with equities firmer this week. OIS has priced in a 90% probability of a hike as of Wednesday morning, compared with around 40% at December-end. Earlier consensus poll showed about three quarters of economists anticipate a move. Highlighted that at this point, BOJ would likely come under intense scrutiny if it failed to follow through after Ueda and Himino gave hawkish signals in recent speeches. Communications strategy remains a notable discussion point. If a rate hike does eventuate, attention will turn to Ueda's framing of the path ahead as the policy rate will be at its highest since 2007, though broadly expected to maintain a gradual trajectory.

    • Notable Gainers:

      • +10.6% 9984.JP (SoftBank Group): president Trump reportedly announces $500B AI infrastructure JV called Stargate to be funded by the private sector with leaders from OpenAI, SoftBank and Oracle attending the briefing

      • +8.1% 4676.JP (Fuji Media Holdings): Dalton Investments reportedly sends second letter saying company is concealing the truth amid accusations involving TV host Masahiro Nakai

      • +6.2% 011200.KS (HMM): provides value-up plan; targets sales CAGR 9%

      • +5.1% 8150.TT (ChipMOS Technologies): to launch 10M-share buyback at NT$21.18-35.00/share

      • +2.0% 004020.KS (Hyundai Steel): reports Q4 operating profit KRW109.0B vs StreetAccount KRW87.31B

    • Notable Decliners:

      • -24.2% 9901.HK (New Oriental Education & Technology Group): reports Q2 earnings and revenue guidance below FactSet estimates; Macquarie, Morgan Stanley, and JP Morgan downgrade ratings following the results

      • -6.9% 540133.IN (ICICI Prudential Life Insurance): reports Q3 earnings; JP Morgan downgrades to neutral from overweight

      • -6.4% 2303.TT (United Microelectronics): reports Q4 earnings with operating income below FactSet estimates

      • -4.9% 806.HK (Value Partners Group): reports unaudited AUM $5.1B as at 31-Dec; StreetAccount notes 30-Sep was $5.4B

  • Data:

    • Economic:

      • New Zealand Q4 CPI +0.5% q/q vs consensus +0.5% and +0.6% in Q3

        • CPI +2.2% y/y vs consensus +2.1% and +2.2% in Q3

    • Markets:

      • Nikkei: 618.27 or +1.58% to 39646.25

      • Hang Seng: (327.78) or (1.63%) to 19778.77

      • Shanghai Composite: (29.00) or (0.89%) to 3213.62

      • Shenzhen Composite: (19.27) or (0.99%) to 1920.43

      • ASX200: 27.40 or +0.33% to 8429.80

      • KOSPI: 29.03 or +1.15% to 2547.06

      • SENSEX: 72.50 or +0.10% to 75910.86

    • Currencies:

      • $-¥: +0.49 or +0.32% to 156.0030

      • $-KRW: (0.11) or (0.01%) to 1433.6900

      • A$-$: (0.00) or (0.21%) to 0.6261

      • $-INR: +0.08 or +0.09% to 86.5331

      • $-CNY: (0.00) or (0.01%) to 7.3133

This information and data is provided for general informational purposes only. The Bank of New York Mellon and our information suppliers do not warrant or guarantee the accuracy, timeliness or completeness of this information or data. We provide no advice nor recommendation or endorsement with respect to any company or securities. We do not undertake any obligation to update or amend this information or data. Nothing herein shall be deemed to constitute an offer to sell or a solicitation of an offer to buy securities.
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