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StreetAccount Summary - Asian Market Recap: Nikkei +0.79%, Hang Seng (0.40%), Shanghai Composite +0.51% as of 03:10 ET

Jan 23 ,2025

  • Synopsis:

    • Asia equities again traded mixed Thursday. Greater China opened higher but weakened over the day with the Hang Seng ending in the red. South Korea sharply lower as tech struggled, Australia also down. Gains in Japan, India, Singapore and most of Southeast Asia. Taiwan is closed for a holiday. US futures a tad lower, Europe opened slightly weaker. US dollar flat, little change in Asia forex. Treasury and other sovereign yields leaning higher. Crude oil futures down, precious metals lower, copper selling off but iron ore maintaining a small gain.

    • Asia investors still digesting mixed tariff news from Trump's first week in office, yesterday threatening a 10% ticket on Chinese goods to alongside those promised for Mexico, Canada, and EU-made products. Latest threats in contrast to promises for an investigation into tariffs made on his first day. China markets responding positively first thing to reports its insurers and mutual funds could add to equity holdings but markets tailed away over the day as the mood soured.

    • Elsewhere, South Korea Q4 GDP growth missed expectations as consumption weakened amid the political turmoil late in the year. The country's business confidence also dropped to four-year low this month. Meanwhile, anti-corruption investigators have asked prosecutors to file insurrection and abuse of power charges against President Yoon for his failed martial law attempt in December.

    • Activist investor City Index Eleventh disclosed it has acquired a 5.1% stake in Oji (3861.JP). LG Innotek (011070.KS) operating profit missed expectations as margins came under pressure. SK Hynix (000660.KS) boosted its dividend amid record quarterly profits driven by AI-related chip sales but the company gave a downbeat forecast on DRAM and NAND. Samsung Electronics (005930.KS) revealed its S25 phone lineup that includes AI integration and with minor design changes. Bain Capital has matched CC Capital's offer for Insignia Financial (IFL.AU) worth A$4.60 per share.

  • Digest:

    • China encourages real money institutional investors to support stock market:

      • Xinhua cited a joint plan announced by Central Financial Work Commission and five other agencies for measures to encourage long term investors to stabilize the stock market. Plan targets a broad array of institutional investors focused on insurers, social security and pension funds. Aims to increase proportion of A-share investment in insurer portfolios and improve the investment management mechanism of the national social security fund and the basic pension insurance fund. Performance evaluation cycle to be more than three years for insurers and basic pension funds, and five years for national social security fund. Strategy to also encourage listed companies to increase buybacks and distribute dividends several times per year. Designated institutions will be able to participate in listed companies' private placements as strategic investors. Cited data showing institutional investors held combined CNY14.5T ($2.0T) of outstanding A-shares in circulation as of August, with proportion of total market cap growing to 22.2% from 17% at the beginning of 2019. Nikkei cited a press conference where CSRC noted major state-owned insurers will "strive" to allocate some 30% of new insurance premium income toward equity investments and expected to translate to "hundreds of billion yuan" in equity inflows.

    • South Korea GDP growth remains subdued:

      • GDP expanded 0.1% q/q in Q4, compared to consensus 0.2%, following 0.1% in the prior quarter. Private consumption increased 0.2% q/q, slowing from 0.5% in Q3. Exports logged a modest 0.3% rebound after a 0.2% decline. Imports edged down 0.1% vs prior 1.6% growth, implying a marginally positive contribution from external demand. Lone drag came from construction, contracting 3.2% to mark the third straight decrease. By sector, manufacturing and services maintained marginal growth, offset by weakness in agriculture, construction and utilities. Q4 results left 2024 GDP up 2.0%, following 1.4% in previous year. Recall BOK had signaled downside risks to its November forecasts for 2.2% in 2024 and 1.9% in 2025. Observed soft consumption and construction, while outlook clouded by domestic politics, government stimulus and forthcoming US policies. Later guided a range of 2.0%-2.1% in 2024 and 1.6%-1.7% in 2025. BOK unexpectedly kept policy rates on hold last week, though Governor Rhee indicated a "great chance" of a rate cut in the next three months with six out of seven board members open to easing. Economist expectations unanimously shifted to a rate cut in February (Reuters).

    • South Korea anti-corruption office hands case against President Yoon to prosecutors:

      • South Korea's anti-corruption office (CIO) has handed its investigation of President Yoon over to prosecutors. They've asked for insurrection and abuse of power charges to be made against the president, adding in its brief, "the suspect continues to be uncooperative" and was defying procedures under criminal justice system; said it would be more effective to give prosecutors its case now (Yonhap). Specific charges state Yoon colluded with defense minister Kim to start a riot by declaring martial law; abuse of power charges come from his order to send troops to National Assembly to stop lawmakers from voting down decree. CIO can only investigate president, not prosecute and was frustrated by Yoon refusing to speak with investigators. Yoon's detention set to end 28-Jan, CIO expects prosecutors to ask courts to extend by 10 days before formally charging president.

    • Japan export growth slows but slightly ahead of expectations:

      • Customs exports rose 2.8% y/y in December, compared to consensus 2.4% and follows 3.8% in the prior month. Main growth drivers were semiconductor making equipment, electronic components and food. Outweighed drags from autos, maritime vessels and construction/mining equipment. By region, US-bound Shipments fell for a fifth straight month, EU edged higher to break a run of eight declines, while Asia remained positive despite China falling for the first time in three months. Imports grew 1.8%, below consensus 3.2%, rebounding from a 3.8% decline in November. Growth in computers, nonferrous metals, nonferrous metal ores were mitigated by drags from crude oil, electronic components and communication devices. Inbound shipments from all three major regions rebounded from previous declines. BOJ real trade indices showed exports were up a sharp 7.4% m/m after two consecutive declines, outpacing a 3.4% rebound in imports. Leaves Q4 exports down 1.1% q/q with imports down a weaker 3.9%, pointing to a positive contribution to GDP.

    • SK Hynix posts record profit:

      • SK Hynix (000660.KS) Q4 earnings were in line with record operating profit of KRW8.08T ($5.6B) and revenues up 75%. Also announced a dividend hike. However, FY25 guidance softened somewhat for both DRAM and NAND. Capex growth outlook also measured. Most of the attention on outperformance vs rival Samsung (005930.KS) mainly owing to competitive advantage in HBM chips to feed AI demand (Reuters). HBM accounted for 40% of DRAM revenue. Commenced supplies of most advanced 12-layer HBM3E chips to a customer in Q4. Alternative take highlighted slower sequential profit growth as burgeoning Chinese industry increases memory market share, though CFO Kim Woo-hyun downplayed the competitive threat (Nikkei). Shares paring an initial selloff Thursday morning after yesterday's Stargate announcement provided broad boost to AI-related names. Bloomberg preview discussed potential turbulence in share price due to Trump effects. After 30% gains YTD on the back of AI tailwinds, outlook blurred by Korean investor rotation to non-tech beneficiaries of Trump policies and smaller stocks expected to enact corporate reforms, while taking profits on SK Hynix positions with its price/book ratio well above its three-year average. Outside of AI, broader chip sector restrained by lingering concerns about sluggish demand for autos and electronics.

    • Notable Gainers:

      • +8.2% 010120.KS (LS Electric): reports FY operating profit and revenue ahead of FactSet estimates

      • +3.8% 207940.KS (Samsung Biologics): reports Q4 revenue and operating profit ahead of StreetAccount estimates

      • +3.0% 3861.JP (Oji): activist City Index Eleventh discloses 5.14% stake

      • +1.9% 2318.HK (Ping An Insurance (Group) Co. of China): China to push for 30% of large state-owned insurers' newly added premiums to be invested into A-shares

      • +0.2% 005380.KS (Hyundai Motor): reports Q4 revenue ahead of StreetAccount estimates; guides FY25 revenue +3.0-4.0% y/y

    • Notable Decliners:

      • -8.0% 2696.HK (Shanghai Henlius Biotech): Shanghai Fosun Pharmaceutical's privatization offer for Shanghai Henlius Biotech rejected by H shareholders' class meeting

      • -6.8% 011070.KS (LG Innotek Co.): reports full Q4 results; analysts broadly noted that operating profit came in below expectations, primarily impacted by pressure on optics margins due to competition

      • -5.8% 028050.KS (Samsung E&A Co.): reports Q4 net income attributable below FactSet estimates; FY25 operating profit and revenue guidance also misses the consensus

      • -2.7% 000660.KS (SK Hynix): shares fall despite Q4 earnings being in line with record operating profit of KRW8.082T

  • Data:

    • Economic:

      • Japan December

        • Trade balance ¥130.9B vs consensus (¥68.5B) and revised (¥110.3B) in prior month

          • Exports +2.8% y/y vs consensus +2.4% and +3.8% in prior month

          • Imports +1.8% y/y vs consensus +3.2% and (3.8%) in prior month

      • South Korea Q4

        • GDP +0.1% q/q vs consensus +0.2% and +0.1% in prior quarter

          • GDP +1.2% y/y vs consensus +1.4% and +1.5% in prior quarter

          • GDP +2.0% in 2024 vs +1.4% in 2023

      • Singapore December

        • CPI NSA Y/Y +1.6% versus consensus +1.5% and +1.6% in prior month

    • Markets:

      • Nikkei: 312.62 or +0.79% to 39958.87

      • Hang Seng: (78.21) or (0.40%) to 19700.56

      • Shanghai Composite: 16.54 or +0.51% to 3230.16

      • Shenzhen Composite: (7.16) or (0.37%) to 1913.26

      • ASX200: (51.10) or (0.61%) to 8378.70

      • KOSPI: (31.57) or (1.24%) to 2515.49

      • SENSEX: 251.91 or +0.33% to 76656.90

    • Currencies:

      • $-¥: +0.03 or +0.02% to 156.5270

      • $-KRW: +2.13 or +0.15% to 1439.3900

      • A$-$: (0.00) or (0.16%) to 0.6264

      • $-INR: +0.02 or +0.02% to 86.4852

      • $-CNY: +0.01 or +0.19% to 7.2856

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