Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei +0.61%, Hang Seng +1.43%, Shanghai Composite +1.27% as of 03:10 ET

Feb 06 ,2025

• Synopsis:

  • Asian equities traded mostly higher Thursday. Solid gains for all of Greater China's benchmarks with Shenzhen leading. Australia, South Korea and Taiwan also all higher. Japan's two main benchmarks closed near day's highs. India and several Southeast Asia benchmarks showing some weakness. US futures higher, Europe opened with gains. US dollar flat to follow overnight weakness, more strength in yen crosses early on, yuan weakened further. Treasury yields higher across tenors. Crude blends higher, precious metals off recent highs, copper and iron ore higher. Cryptocurrencies continuing their recovery.

  • Asia markets saw strong returns Thursday with many benchmarks now higher for the week, brushing aside concerns over tariffs at least for now. All Greater China's main boards now positive WTD with strongest gains in Hong Kong-listed technology stocks, pushing its tech index almost 7% higher over four days. Trade tariff rhetoric cooled further overnight with Canada and Mexico tariffs on hold, and Beijing's response to Trump's tariffs seen as moderate. Meanwhile, threatened tariffs on US chips has encouraged talk Hong Kong listed IT companies will develop their own technology, leading to significant gains for several names. Hong Kong consumer names lifted today by reports late Wednesday the US postal service had reversed its decision to suspend delivery of China-sourced parcels.

  • Elsewhere, currencies stronger as the dollar weakened further. Outsized strengthening in yen first thing after BOJ hawk Tamura said interest rates need to rise to 1% by H2 FY25 amid increasing likelihood of inflation target being realized. Reports also highlighted surge in yen option volumes, indicating traders think the yen could strengthen towards ¥147 per dollar. Quiet on the economic news front. Early China LNY activity data appears encouraging with growth across many categories as an extra day's holiday was included, although analysts said they may not prove good enough to change bigger-picture macro projections.

  • A Japan Airlines (9201.JP) place clipped a Delta Airlines plane while taxing in Seattle. Bain Capital is near a deal to buy Mitsubishi Chemical's (4188.JP) pharma unit Tanabe. Mitsubishi Corp (8058.JP) is to book ¥438.6M ($438M) impairment charge on its Japan offshore wind projects, reiterated it was reviewing how to proceed with the projects. Nissan Motor (7201.JP) is reported to be seeking new partners as its deal with Honda Motors (7267.JP) nears collapse. Yageo Corp (2327.TT) launched an unsolicited offer for Shibaura Electronics (6957.TT). Macquarie Group (MQG.AU) is to close its US debt capital markets unit to focus on private credit.

• Digest:

  • BOJ's Tamura expects to meet inflation target by H2 of FY25:

    • In a speech, BOJ board member Tamura discussed monetary policy and noted his personal expectation the inflation target will be achieved by H2 of FY25. At that point, went on to say BOJ needs to raise rates to the neutral level, tentatively estimated at least around 1%. Added policy rate needs to be at least at that level by H2. Reasoned that below-neutral levels would further push up inflation given his standing view that risks lie to the upside. Qualified with caution towards potential disruptions to economic agents that have not seen meaningful rate levels for a long time, warranting monitoring without any preconceptions. As such, Tamura will assess appropriate timing of the next the next rate, explicitly clarifying this would take the policy rate to 0.75%. Believes that level would still leave real rates significantly negative with still a long way to go before reaching restrictive conditions. Separately, Tamura weighed in on the recent long-term policy review of unconventional easing, playing up significant side effects, contrasting with the balanced view conveyed in the report. Acknowledged positive effects on the economy but for only the first two years or so, while subsequent additions were limited. Forward-looking implication was that BOJ should be more cautious about limitations if unconventional easing is considered again.

  • China LNY activity grows but so far failed to impact macro data:

    • Mainland China LNY holiday activity metrics registered broad increases, helped by an extra day over last year's break. VAT invoice data showed 10.8% y/y growth in revenues with strength in both goods and services consumption (Xinhua). Main tailwind was the ongoing consumer goods trade-in program. Yet sales from tourism-related services expanded a sharp 37.5% as sports and fitness sectors soared by triple digits. Breadth extended to growth in department/convenience store sales. Box office takings reached a record $1.33B from 28-Jan to 4-Feb with 187M attendance also at an all-time high (Xinhua). Culture & Tourism Ministry said domestic tourism traffic was a record 501M, up 5.9% y/y (Xinhua). Spending also rose 7% to over CNY677B ($94.4B), averaging CNY1,351 per day, up from last year's CNY1,335 according to Reuters, equating to a 1.2% increase. Bloomberg calculations also noted growth in spending per trip though remained below pre-pandemic levels. Positive takeaways were constrained by disappointment in the latest Caixin service PMI, reinforcing primary attention on stimulus, particularly any response to counter impacts from US tariffs.

  • Nissan-Honda merger aborted, but something lost in translation:

    • In the wake of yesterday's report that Nissan (7201.JP) and Honda (7267.JP) will suspend merger talks, Nikkei confirmed earlier reports that Nissan CEO Makoto Uchida directly conveyed the decision to terminate the merger MOU to Honda CEO Toshihiro Mibe at a joint meeting Thursday morning that included their respective executives. Article noted historic deal that would have created the world's third-largest auto group now back to square one. Followed a Nissan board meeting Wednesday when a verdict was reached. However, notable contrast in the English language version that used the word "suspended," sowing more confusion over the finality of the decision. Story added companies will consider a future restart of merger discussions and/or continued collaboration in areas such as EVs. Recall from prior reports that Nissan has been insistent on an equal partnership and talks fell through when Honda proposed making Nissan a subsidiary to expedite its restructuring plan. Bloomberg sources said Nissan is seeking a new partner as it prepares to end negotiations with Honda. Ideal candidate said to be a US tech-based firm. Kyodo earlier cited analyst suggestions that Hon Hai (2317.TT) could intensify its efforts to acquire a stake in Nissan, given its recent entry into the EV market and past talks with Renault (RNO.FP) to purchase some of their Nissan shares.

  • USPS reverses decision to ban inbound parcels from China as trade tensions persist:

    • USPS reversed an earlier decision to ban all inbound parcels from China, saying it is working with US customs on efficient collection mechanism after White House revoked $800 de minimis tariff exemption (Bloomberg). Initial decision to ban parcels sparked concerns about impact on operations of China e-commerce vendors such as Shein andPDD-owned Temu (Bloomberg).US-China trade tensions resurfaced after both countries lobbed tariffs and other trade actions against the other this week. Bloomberg sources reported China's State Administration for Market Regulation preparing anti-trust investigation of AAPL. Washington Post sources noted Beijing growing more wary about allowing a deal on TikTok amid the rise in tensions. Meanwhile, US momentum growing to revoke China's Permanent Normal Trade Relations (PNTR) status, which could see automatic spike in tariffs (Reuters). There was some hope earlier this week Presidents Trump and Xi would negotiate an outcome averting tariffs, similar to deals Trump struck with Mexico and Canada. However, uncertainty surrounds prospects of a Trump-Xi phone call with nothing scheduled so far (Reuters).

  • StreetAccount Event Preview: RBI policy meeting, 7 February

    • RBI is widely expected to trim its base interest rate Friday as new Governor Sanjay Malhotra seeks to boost economic growth, loosen bank's grip on rupee. Most economists in Reuters and Bloomberg surveys expect bank to cut repo rate 25 bp to 6.25%; minority opting for no change on account of persistently high inflation, handful forecast 50 bp cut. Malhotra not given any public hints since appointment however Bloomberg cited RBI insiders saying he favors allowing rupee to weaken in parallel with Asia peers, while analysts said last week's $18B liquidity injection, which will include a INR500B 56-day variable rate repo auction tomorrow, hints bank was preparing to cut rates (Reuters). Also follows federal budget last weekend which cut taxes yet kept fiscal spending contained, allows RBI scope to trim base rate (Mint). Malhotra to chair almost entirely new six-member MPC since last meeting, making board members' views hard to gauge. Comments on commitment to bringing inflation down to 4% target, rate trajectory, liquidity difficulties will be closely watched.

  • Notable Gainers:

    • +17.2% 326030.KS (SK Biopharmaceuticals Co.): reports Q4 earnings with operating profit and revenue ahead of FactSet estimates

    • +14.9% 003230.KS (SAMYANG FOODS): reports FY earnings with revenue ahead of FactSet estimates

    • +12.6% 6723.JP (Renesas Electronics): reports Q4 revenue and non-GAAP operating profit ahead of StreetAccount estimates; Q1 revenue guidance beats FactSet consensus

    • +3.8% 8604.JP (Nomura Holdings): reports Q3 earnings; declares 100th anniversary commemorative dividend of ¥10/share; analysts generally upbeat on results with some highlighting solid performance of wholesale business

    • +0.4% 2327.TT (Yageo): launches tender offer for Shibaura Electronics at ¥4,300/share

  • Notable Decliners:

    • -6.7% 105560.KS (KB Financial): reports Q4 earnings with gross operating income and PPOP below StreetAccount estimates; analysts widely positive on shareholder returns, but note results slightly missed expectations

    • -5.9% 9433.JP (KDDI Corp): reports Q3 earnings below StreetAccount estimates; confirms chairman Takashi Tanaka will retire 1-Apr with president and CEO Makoto Takahashi to be appointed replacement

    • -5.7% 6367.JP (DAIKIN INDUSTRIES): reports 9M results; analysts broadly negative on the print citing deterioration in product mix

    • -4.8% 2379.TT (Realtek Semiconductor): reports Q4 revenue below FactSet estimates; analysts widely note GPM missed due to changes in product mix amid pull-in orders, but broadly positive on 2025 outlook

    • -4.0% 7267.JP (Honda Motor): amid reports Honda and Nissan may terminate merger talks, the companies announce they remain in talks

    • -1.2% 002142.CH (Bank of Ningbo): reports preliminary FY net income attributable below FactSet estimates; analysts widely positive on topline growth, but note bottom line was impacted by higher tax

    • -1.0% 096770.KS (SK Innovation): reports FY earnings operating profit below StreetAccount estimates

• Data:

  • Economic:

    • Australia

      • Q4 NAB business confidence index (4) vs (7) in Q3

      • December trade balance A$5.09B vs consensus $6.50B and revised A$6.79B in November

        • Exports +1.1% m/m vs +4.8% in November

        • Imports +5.9% m/m vs +1.7% in November

  • Markets:

    • Nikkei: 235.05 or +0.61% to 39066.53

    • Hang Seng: 294.53 or +1.43% to 20891.62

    • Shanghai Composite: 41.17 or +1.27% to 3270.66

    • Shenzhen Composite: 44.96 or +2.34% to 1964.55

    • ASX200: 103.80 or +1.23% to 8520.70

    • KOSPI: 27.48 or +1.10% to 2536.75

    • SENSEX: (332.67) or (0.43%) to 77938.61

  • Currencies:

    • $-¥: (0.09) or (0.06%) to 152.5100

    • $-KRW: +4.33 or +0.30% to 1449.7500

    • A$-$: (0.00) or (0.41%) to 0.6261

    • $-INR: +0.21 or +0.24% to 87.5471

    • $-CNY: +0.01 or +0.19% to 7.2861