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StreetAccount Summary - Asian Market Recap: Hang Seng (1.06%), Shanghai Composite (0.12%), , Kospi +0.71% as of 03:10 ET

Feb 11 ,2025

• Synopsis:

  • Asian equities traded mixed Tuesday. Greater China finished lower following an almost six-day consecutive rally on positive DeepSeek-related sentiment. India also down along with Singapore and a handful of Southeast Asia benchmarks. Gains for South Korea and Taiwan, Australia a couple of points higher. Japan closed for a holiday. US futures lower but off troughs, Europe mixed in early trade. US dollar off earlier highs, rupee strengthening notably after RBI intervention, little forex movement of note elsewhere. Treasury yields mixed. Crude higher, gold seeing new record highs, base metals mixed as traders figure out impact of new US and reciprocal tariffs.

  • Asia investors trying to calculate the impact of recent wave of tariff newsflow after President Trump followed through with a 25% tariff on aluminum and steel imports, warned tariffs could rise in the future, warned on tariffs on autos, semiconductors and pharma products; and said he would announce reciprocal tariffs against a number of countries within the next 48 hours. Still, markets largely brushing off the latest salvo for now just as Australia's PM said he may have earned a pause on Australia steel export tariffs, and India's PM Modi heads to Washington armed with promises of India import tariff cuts.

  • Hong Kong's technology-listed stocks taking a breather from their recent strong rally that began with DeepSeek and Alibaba announcing AI-related breakthroughs with most of the recent gainers losing ground. Little other fresh newsflow to distract from the overarching tariff narrative although India's rupee was boosted noticeably by a significant intervention by the RBI for a second straight day.

  • Softbank (9984.JP) is considering using a project finance approach to capitalize its $500B Stargate AI venture, according to Bloomberg reports. CATL (300750.CH) is reported to be ready to file for its Hong Kong listing as early as today or Wednesday. China Vanke (2202.HK) secured a CNY 2.80B loan from Shenzhen Metro government backed by a 18.3% stake in Onewo (2602.HK), and will be used to repay principal and interest on debt. Country Garden (2007.HK) said its new home sales dropped 59% y/y in January to CNY2.26B ($309M). BYD (1211.HK) is to integrate driver-assistance features across most of its vehicle line up including its cheaper models, potentially triggering an EV price war. Bluescope Steel (BSL.AU) stock rallied on reports Australia PM has persuaded President Trump to consider an exemption for Australia on US steel and aluminum tariffs. NTPC (532555.IN) is in initial talks with a range of foreign technology suppliers to expand its nuclear energy capabilities and add 10 gigawatts power by 2033.

• Digest:

  • Trump follows through on steel, aluminum tariffs and will examine cars, chips next:

    • President Trump signed an executive order for a 25% tariff on steel and aluminum imports (Bloomberg, Reuters). An FT source said tariffs would commence 4-Mar. Covers finished metal products with no exemptions which was deemed to have diluted prior Section 232 actions during Trump's first term. US officials said prior carve-outs and Biden's duty-free quotas for EU, UK and Japan would effectively be nullified while Trump is seeking to eliminate the product exclusion process. Yet, Trump indicated he may consider making an exception for Australia. Order calls for a new North American standard requiring steel imports to be "melted and poured" and aluminum to be "smelted and cast" in the region to curb imports of minimally processed Chinese steel into the US. In addition to a step-up from tariffs imposed in 2018, inclusion of downstream products this time also set to be far-reaching in contrast to upstream products targeted previously. Articles went on to discuss the growing list of tariff actions raising the risk of a trade war. Noted 10% tariffs on China imports went into effect, 25% on Canada and Mexico paused, while Trump has flagged additional reciprocal tariffs to be announced in the next two days. Trump added administration will examine further measures on cars, semiconductors and other sectors.

  • No sign of US-China tariff detente, as Trump's metal tariffs put spotlight on China's producers:

    • With China's retaliatory tariffs on select US products going into effect Monday (Washington Post), markets awaiting whether any de-escalation signals will be forthcoming. In Monday Fox News interview, President Trump revealed he had spoken with China President Xi since his inauguration though did not provide details other than talking up their personal relationship (Reuters, Bloomberg). Trump administration had recently flagged a phone call with Xi but Trump maintains he is in no hurry to talk. China also considered a prime target of Trump's steel and aluminium tariffs (NY Times). China exports minimal volumes of steel to US, comprising just 1.8% of total US steel imports in 2024 (Reuters). However, China's global steel exports hit nine-year high in 2015 with recipient countries reprocessing steel before re-exporting to US (Reuters). Trump's 25% tariffs, their extension to finished products and removal of prior exceptions and exemptions, seen stoking global overcapacity/dumping concerns. According to OECD, China accounts almost 50% of global steel production capacity with its steel subsidies considerably higher than other countries (Nikkei).

  • Asian economies brace for Trump's reciprocal tariffs:

    • With President Trump to announce reciprocal tariffs in coming days, economists gauging implications for countries that have large tariff disparities with US. India and Thailand cited as countries with most to lose given their large tariff differentials. Nomura highlighted India's 9.5% average tariff on US compared to US' 3% tariff and Thailand's 6.2% rate compared to US' 0.9%. Morgan Stanley added that both face weighted average tariff increases of 4-6%. HSBC bracketed South Korea and Japan with India and Thailand, warning that Korea could be materially impacted with more than 50% of its auto exports bound for US and a tariff differential of ~12%. Countries with free trade agreements across much of developed Asia seen having greater degree of insulation though trade surpluses with US still leaves them at risk. Tariff threat expected to accelerate efforts by Asian leaders to secure exemptions. India already taking steps to appease Trump ahead of a White House visit by PM Modi, having reduced import duties on several products. Japan PM Ishiba recently met Trump at White House, making overtures to boost LNG purchases and committing to raising investment in US.

  • India's rupee rallies as RBI intervenes on tariff threats:

    • Rupee rallied more than 0.7% Tuesday morning under likely RBI intervention, according to analysts cited by BusinessStandard. Rupee also strengthened against euro and yen by around 0.7%, underpinning move was rupee-based rather than result of dollar action. Analysts noted bank has $630B in forex reserves, 10 months of import cover to support rupee, and comes as rupee reached another record low against USD late Monday on fears of escalating trade war. BusinessTimes reported on Nomura research that said India particularly exposed to US tariffs within Asia region, with steel, pharma and chemicals sectors most at risk. Analysts quoted by Bloomberg said intervention would remove speculative positioning with another saying RBI could have spent up to $7B Monday, $4B today to prop up currency. Rupee dropped to successive lows post appointment of Sanjay Malhotra as RBI governor in December, and after he hinted he would place less emphasis on currency support.

  • Hang Seng rally stalls but DeepSeek, Alibaba, southbound flow support continues:

    • Hong Kong's equity rally stalling somewhat in early Tuesday trade following rally that has seen Hang Seng index rise five out of past six sessions, and taken Hang Seng Tech index to technical bull market Friday. Rally fueled on IT optimism post DeepSeek breakthrough, specifically that domestically-developed AI LLM models that do not use highest-grade chips can still compete, may encourage investment that had been lacking to-date (Bloomberg). Alibaba (9988.HK) up 20.5% MTD, SMIC (981.HK) +25.3%, Kuaishou Technology (1024.HK) +13% since DeepSeek announced. Bloomberg cited analysts saying Hong Kong-listed technology stocks continue to trade at substantial discount to US peers. Also noted rally fueled by Southbound exchange links, which has seen HK$150B ($19.3B) move into Hang Seng YTD, seven times level in same period last year. Options trading Friday also leant bullish, suggesting derivatives investors see further upside, at least for now.

  • Notable Gainers:

    • +20.6% 012450.KS (HANWHA AEROSPACE): reports Q4 operating profit and revenue ahead of FactSet estimates

    • +10.7% 9698.HK (GDS Holdings): reportedly considering US IPO of GDS International to raise around $500M

    • +7.5% 139480.KS (E-Mart): reports Q4 earnings; value-up plan; targets FY27 revenue KRW34T

    • +5.7% 000120.KS (CJ Logistics): reports Q4 operating profit and revenue ahead of FactSet estimates

    • +2.9% 2317.TT (Hon Hai Precision Industry): reports January revenue NT$538.67B, +3.2% y/y; guides Q1 to record strong growth y/y

    • +1.6% MQG.AU (Macquarie Group): reports 9M NPAT broadly in line y/y

    • +0.5% 2330.TT (Taiwan Semiconductor): reports January revenue NT$293.29B, +35.9% y/y; company estimated related earthquake losses to be NT$5.3B, net of insurance claim and will recognize in Q1

  • Notable Decliners:

    • -4.0% 097950.KS (CJ CheilJedang): reports Q4 operating profit and revenue below FactSet estimates

    • -2.6% 001040.KS (CJ Corp): reports FY results with operating profit below FactSet estimates

    • -1.8% 011790.KS (SKC Co.): reports FY earnings with operating profit and revenue below FactSet estimates

    • -1.2% 2007.HK (Country Garden Holdings): reports January contracted sales attributable CNY2.26B; StreetAccount notes the year-ago figure was CNY5.49B

    • -0.2% 2202.HK (China Vanke): obtains up to CNY2.80B loan from Shenzhen Metro backed by 18.3% stake in Onewo

• Data:

  • Economic:

    • Australia January

      • NAB business confidence +4 vs (2) in December

        • Business conditions +3 vs +6 in December

  • Markets:

    • Nikkei: Closed

    • Hang Seng: (227.12) or (1.06%) to 21294.86

    • Shanghai Composite: (4.11) or (0.12%) to 3318.06

    • Shenzhen Composite: (9.83) or (0.49%) to 2007.99

    • ASX200: 1.20 or +0.01% to 8484.00

    • KOSPI: 17.78 or +0.71% to 2539.05

    • SENSEX: (1,001.44) or (1.30%) to 76310.36

  • Currencies:

    • $-¥: +0.09 or +0.06% to 152.0770

    • $-KRW: (0.27) or (0.02%) to 1451.2800

    • A$-$: +0.00 or +0.05% to 0.6281

    • $-INR: (0.71) or (0.81%) to 86.7631

    • $-CNY: (0.00) or (0.06%) to 7.3010