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StreetAccount Summary - Asian Market Recap: Nikkei +0.04%, Hang Seng +1.84%, Shanghai Composite +0.56% as of 03:10 ET

Feb 10 ,2025

• Synopsis:

  • Asia equities tilted lower Monday outside of China. Hong Kong led the gainers with more sharp advances at its internet and IT names while mainland China benchmarks also ended at month-long highs. Singapore saw some support but the rest of the region saw losses: South Korea pared early gains, while Japan's main boards ended flat in a choppy day's trading. Among the decliners were Australia, Taiwan and India alongside most of Southeast Asia. US futures higher, Europe opened with small gains. Dollar stronger on tariff news, yen and onshore yuan weaker, AUD seeing some strength. Treasury yields higher across tenors. Crude contracts well bid, gold through $2.9K to a fresh record high. Base metals higher on steel and aluminum tariff news.

  • Hong Kong's Hang Seng index surged to new YTD highs as its AI-related stocks surged again. Alibaba spiked sharply higher on rumors circulating Friday that it invested $10B into DeepSeek, despite the company denying the story. Baidu and Meituan were also higher again Monday. Away from Hong Kong, other indexes uncertain of their next direction following Trump's imposition of a 25% tariff on all steel and aluminum products. The dollar bounced a little on the news to provide fresh headwinds for exporters, while steelmakers and miners in South Korea, India and China all underperformed. Elsewhere, China's January inflation data was mixed with CPI accelerating but largely on the LNY spending effects, while PPI was worse than consensus forecasts. China credit data due at anytime and is widely expected to show an improvement however there are few other datapoints expected this week aside from a Xi-Trump call that is expected soon.

  • Alibaba (9988.HK) moved Friday to deny speculation it had made a 10%, $10B investment in DeepSeek Dongfeng Motor Group's (489.HK) parent company is reported to be in restructuring talks with another state-owned enterprise which may lead to a change in the company's controlling shareholder; shares substantially higher. Star Entertainment (SGR.AU) is in talks with its Hong Kong-based partners Chow Tai Fook and Far East Consortium (35.HK) over the sale of a new $1B Brisbane project that still needs a capital injection to complete. Woori Financial Group (316140.KS) became the latest South Korea corporate to announce its shareholder value enhancement plan, to begin KRW150B share buyback.

• Digest:

  • Trump to announce 25% tariffs on all steel and aluminum imports Monday, more reciprocal levies to follow soon:

    • President Trump told reporters on Air Force One that he will announce 25% tariffs on all imports of steel and aluminum, though did not state when they would take effect (Bloomberg, Reuters). These will come on top of existing metals duties. Added separate reciprocal tariffs would come later this week on countries that tax US imports while clarifying they will not be effective on the same day as the announcement, which could be made Tuesday or Wednesday, though soon after. Many steel and aluminum traders said to have thought they had until March before any tariff implementation after Trump delayed the start of measures against Mexico and Canada. Not immediately clear if metals tariffs would still apply to these countries. Industry group figures show largest sources of US steel imports are Canada, Brazil, Mexico, South Korea and Vietnam. Canada by far the largest supplier of primary aluminum, accounting for 79% of the total in Jan-Nov. Articles hinted reciprocal tariffs may target EU, recalling Trump's longstanding compliant that EU's 10% auto import levy is much higher than the US rate of 2.5%. Trump comments follow German Chancellor Scholz remarks that Europe is prepared to respond "within an hour" if US imposes tariffs against EU (Reuters).

  • Trump-Ishiba talks were positive, but rules out Nippon Steel having majority stake in US Steel:

    • Discussions between President Trump and Japan Prime Minister Ishiba were largely consistent with earlier discussions floated in the press (Nikkei). Trump was receptive to Japan's overtures to reduce its trade surplus with US through avenues such as LNG purchases, while reaffirming zero tolerance for chronic US deficits. Confirmed discussions of a JV to build a pipeline through Alaska. Ishiba added Japan's interest in bioethanol, ammonia and other resources. Japan PM pledged to raise US investment to $1T though did not specify a timeframe. Joint statement strengthened language in support of Taiwan. Trump reaffirmed 100% commitment to Japan's security. Main surprise came in discussions on the Nippon Steel (5401.JP) acquisition of US Steel (X). Trump said Nippon "agreed to invest heavily in US Steel as opposed to own it" (Nikkei). Ishiba later echoed remarks in an NHK TV program Sunday, clarifying US Steel will remain an American company (Bloomberg). Resolution falls somewhere between disappointment that a merger won't go through and optimism that all sides avoid the worst-case scenario. Nippon Steel shares fell sharply after Trump added it can't have majority stake in US Steel (Nikkei).

  • China inflation data mixed, stronger CPI skewed by LNY effects:

    • CPI rose 0.5% y/y in January, slightly above consensus 0.4%. Follows 0.1% in the previous month and marks the highest since last February. Core inflation strengthened to 0.6% from 0.4%. Pickup was mainly attributed to Lunar New Year holiday factors, which lifted services inflation to 1.1% from 0.5% via leisure activities. Nomura estimated LNY effects added about 0.4 ppt to the headline. Rebound in gasoline prices also contributed. Overall, CPI inflation remained steady at 0.2% in 2024, well below the government's soft target of around 3%, undershooting for the 13th straight year (Reuters). Ongoing concerns about deflation reinforces attention on the 2025 economic targets to be announced at the March NPC. Some thoughts there will be no more changes in monetary or fiscal policy until then. In contrast, PPI deflation was steady at 2.3% y/y, below consensus 2.1%. Headline remained weighed down by stable upstream declines, negating a slight narrowing downstream. Weakness also generally attributed to LNY as corporate activity winds down during the holidays.

  • South Korea opposition leader proposes $21B extra budget to revive economy:

    • Leader of South Korea's opposition Democratic Party, Lee Jae-myung, Monday urged government to draw up KRW30T ($20.6B) supplementary budget to support small businesses, revive national economy (Yonhap). Said supplementary budget should be aimed at stimulating sagging growth amid political turmoil triggered by President Yoon's martial law declaration in December. Lee said key industries including AI-related technology, biotechnology, defense, energy needed strategic investments as priority sectors. Added military readiness needed to be reinforced to respond to Pyongyang's nuclear threat. Call for budget comes week after BOK Governor Rhee warned sustained growth could not be attained by easing monetary policy alone, said KRW15-20T extra budget would be appropriate. Separately Monday, country's acting President Choi Sang-mok met with several of country's ministries to assesses effects of President Trump's 25% tariff on all steel and aluminum products, and is considering measures to offset impact (Yonhap).

  • AI emerges as stronger than expected tailwind for Japan manufacturer earnings:

    • Nikkei discussed AI tailwinds, helping to lift Japan's manufacturing sector 9M profit growth to 8% y/y, rebounding from a 6% decline in the previous year. Earnings were aggregated from 331 manufacturers that reported results as of Friday, accounting for 70% of the sector with a March fiscal year-end and 80% of market cap. Also noted better breath as 59% of firms posted higher profits, up 5 ppt on the year. Benefits from AI-related investments spreading, particularly in semiconductor materials. Notable mentions were Ajinomoto's (2802.JP) record profits on strong sales of insulating materials. Asahi Kasei (3407.JP) net earnings jumped 68% on the back of plastics used in chipmaking. Further downstream, generative AI driving demand for data centers and related power infrastructure equipment. Sumitomo Electric (5802.JP) saw strong sales of optical drives and power cables. Mitsubishi Heavy (~7011.JP) earnings driven by growth in gas turbines for power plants. Software companies NEC (6701.JP), Fujitsu (6702.JP) profits more than doubled on the back of demand for AI services. Recall prior discussions that DeepSeek prompted a rotation from AI hardware to software. Weak yen provided a windfall, though was not enough to negate struggles in other sectors such as autos and steel.

  • Notable Gainers:

    • +25.7% 489.HK (Dongfeng Motor Group): controlling shareholder Dongfeng Motor Corporation in restructuring talks with another central SOE

    • +23.1% 2432.JP (DeNA Co.): reports Q3 ahead of FactSet estimates

    • +22.0% 6976.JP (Taiyo Yuden): reports Q3 earnings with revenue ahead of FactSet estimates; raises FY guidance; analysts broadly positive on better MLCCs demand trends, restructuring

    • +6.0% 316140.KS (Woori Financial Group): reports Q4 earnings; announces corporate value enhancement plan for FY25; plans KRW150.00B buyback

    • +5.9% 4613.JP (Kansai Paint): reports Q3 earnings with operating income ahead of FactSet estimates; brokers widely upbeat on solid results domestically

    • +5.2% 1963.JP (JGC Holdings): Ishiba, Trump reportedly discuss increasing LNG exports to Japan, LNG cooperation in Alaska

    • +2.4% 383220.KS (F&F Co.): reports Q4 results with operating profit ahead of FactSet estimates

    • +1.3% 6753.JP (Sharp Corp): reports Q3 earnings with operating profit ahead of FactSet consensus; better-than-expected brand segment widely highlighted by analysts

  • Notable Decliners:

    • -12.8% 2607.JP (Fuji Oil Holdings): reports 9M earnings with year-on-year decline in operating profit

    • -8.7% 1368.HK (Xtep International Holdings): launches share placement, top-up subscription and convertible note issue

    • -3.0% 2454.TT (MediaTek): reports Q4 earnings with EBIT below FactSet estimates

    • -1.7% 011170.KS (Lotte Chemical): reports Q4 earnings with operating profit below FactSet estimates

    • -0.8% 005490.KS (POSCO): President Trump to announce 25% tariffs on all steel and aluminum imports Monday

    • -0.5% 5401.JP (NIPPON STEEL): President Trump reportedly now says Nippon Steel looking at "investment" in US Steel, not a purchase

• Data:

  • Economic:

    • China

      • January CPI +0.5% y/y vs consensus +0.4% and +0.1% in prior month (Sunday CST)

        • PPI (2.3%) y/y vs consensus (2.1%) and (2.3%) in prior month

    • Japan

      • December current account balance ¥1,077.3B vs consensus ¥1,374.2B and ¥3,352.5B in prior month

      • January bank lending +3.0% y/y vs revised +3.0% in prior month

  • Markets:

    • Nikkei: 14.15 or +0.04% to 38801.17

    • Hang Seng: 388.44 or +1.84% to 21521.98

    • Shanghai Composite: 18.50 or +0.56% to 3322.17

    • Shenzhen Composite: 21.57 or +1.08% to 2017.81

    • ASX200: (28.60) or (0.34%) to 8482.80

    • KOSPI: (0.65) or (0.03%) to 2521.27

    • SENSEX: (735.59) or (0.94%) to 77124.60

  • Currencies:

    • $-¥: +0.79 or +0.52% to 152.1980

    • $-KRW: (3.48) or (0.24%) to 1451.4400

    • A$-$: (0.00) or (0.03%) to 0.6271

    • $-INR: (0.19) or (0.21%) to 87.6040

    • $-CNY: +0.02 or +0.27% to 7.3073