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StreetAccount Summary - Asian Market Recap: Nikkei +0.06%, Hang Seng (0.02%), Shanghai Composite +0.27% as of 03:10 ET

Feb 17 ,2025

• Synopsis:

  • Asian equities mostly higher Monday. Taiwan and Korea outperformed with semis seeing broad gains. Greater China mixed as AI-fueled rally in Chinese tech shares stalled with mainland slightly higher while Hang Seng flat and Hang Seng Tech Index dropped as some perceived tech stock gains as overdone. Japan marginally higher and ASX lower weighed down by banks. US contracts ticking up (US markets closed Monday for a holiday). India trading slightly lower after eight consecutive sessions of losses. JGB yields higher with 10Y yield hitting 15-year high after better-than-expected GDP data. Yen at one-week high against dollar. Aussie dollar stronger too. Crude was flat while gold edging higher. Bitcoin near bottom end of recent range.

  • Lots of attention on China tech stock gains after DeepSeek's AI breakthrough has spurred $1.3T rally in Chinese equities in the past month. President Xi attended a symposium with a slew of prominent Chinese private sector leaders on Monday, signaling top-level support for private enterprises amid US-China rivalry and Beijing's ambition for tech self-reliance. Goldman Sachs being the latest broker that raised MSCI China index target on optimism over its technological advancements.

  • Japan Q4 GDP notably beats expectations as companies boosted investment and net exports improved. Japan has asked Washington for exemption from Trump's reciprocal trade tariffs. Singapore's key exports in January fell more than estimates, led by drop in non-electronic exports. Thailand Q4 GDP grew less than expected in Q4 and brought whole-year growth to 2.5% y/y, slower than estimates. Indonesia's trade surplus in January bigger than forecast amid surprisingly weak imports.

  • In corporate developments, Tencent's (700.HK) shares hit highest level since 2021 after company integrated DeepSeek's AI model into WeChat Search. Baidu (9888.HK) said it would fully connect its search engine to DeepSeek as well as its proprietary Ernie LLM though its shares plunged 7% Monday, likely due to profit-taking ahead of earnings on Tuesday. TSMC (2330.TT) and AVGO each eyeing potential deals to split INTC into two. Trump signaled openness to Nippon Steel (5401.JP) taking minority stake in US Steel (X). Westpac (WBC.AU) shares slid after profit and margins slipped and Bendigo & Adelaide (BEN.AU) shares recorded worst day ever after first-half profit trailed estimates while margins came under pressure.

• Digest:

  • President Xi attends symposium with China's private sector leaders to show support:

    • Xinhua confirmed President Xi attended symposium on private enterprises on Monday and delivered speech after listening to business representatives. Reuters noted attendees included Alibaba's (9988.HK) founder Jack Ma, Huawei's Ren Zhengfei, Xiaomi's (1810.HK)'s Lei Jun, BYD's (1211.HK) Wang Chuanfu and CATL's (300750.CH)'s Robin Zeng. Bloomberg noted meeting demonstrates more supportive stance from Chinese leadership toward private sector and came after DeepSeek-fueled tech rally sending both Hang Seng China Enterprises Index and Hang Seng Tech Index to highest level since February 2022. Added endorsement from Xi sends clear signal of top-level support that views tech sector as future driver of growth amid US-China rivalry. Recall regulatory crackdown on China's mega tech started in late 2020 when Alibaba's Ant Group shelved IPO at last minute. Bloomberg added DeepSeek's breakthrough has fueled rotation of stock funds back into China from India as global funds reassess fundamentals of China's investability with Goldman the latest raising China stock target (Bloomberg) and Hong Kong's derivatives trading surging in February with market rally (Bloomberg). Meanwhile markets still hope for more China stimulus at upcoming NPC amid uncertainty of US-China trade tensions as some caution against crowded trading and increasing valuations.

  • Japan Q4 GDP notably beats:

    • GDP expanded 2.8% q/q annualized in Q4, above consensus 1.1%, following revised 1.7% in prior quarter. Translated to 0.7% q/q non-annualized vs consensus 0.3% and revised 0.4% in Q3. Details were generally in line with expectations. Main driver was external demand, mostly from lower imports while exports grew moderately. Some upside surprise from mild growth in private consumption against expectations of a marginal decline. Strength was led by durable goods, outweighing declines in semi/non-durables, while services edged higher. Underlying support came from employee compensation, up 1.5% q/q, marking the strongest growth since 4Q20. Moreover, nominal compensation increased 5.8% y/y, highest in at least a decade, attesting to strength in base wage growth, amplified by winter bonuses. Capex and residential investment logged small gains. Public demand was little changed with contribution neutral. Only offsetting drag came from private inventories. GDP deflator rose 2.8% y/y, matching expectations, following 2.4% in Q3. Domestic demand deflator edged up to 2.3% from 2.2%. Nominal GDP expanded 1.3% q/q vs consensus 1.2% and 0.7% in Q3.

  • PBOC Governor Pan reaffirms expansionary policy mix, yuan stability policy:

    • Press cited comments from PBOC Governor Pan at a weekend conference in Saudi Arabia, repeating pledges to adopt a more proactive fiscal policy and more accommodative monetary policy (Bloomberg). Also noted increasing prioritization of consumption through policies to increase household income and subsidies (Reuters). Still, acknowledged that China is facing risks from "rising trade protectionism, geopolitical tensions and the fragmentation of the global economy." Authorities remain committed to the opening up of the economy, adding that the nation will "advocate free trade" and fair competition. On FX, played up recent yuan stability and reiterated messaging that PBOC will aim to "keep the market exchange rate basically stable at an adaptive and equilibrium level." Key talking points were consistent with recent policy rhetoric as well as the latest Q4 PBOC policy report which reaffirmed easing would be conducted at the appropriate time. Also notably mentioned reasonable rebound in inflation as an important considering for policy against the backdrop of persistently low price growth undershooting annual targets and market concerns of deflation.

  • China lending hits new record, but broader details softer:

    • New loans were CNY5.13T ($706.4B) in January, well above consensus CNY4.50T. Follows CNY990B in the previous month and marks a record high. Main driver was corporate loans at CNY4.78T vs prior month's CNY490B, while household loans picked up moderately to CNY443.8B from CNY350B. New loans largely drove total social financing to CNY7.06T vs consensus CNY6.4T and CNY2.86T in December. Notable contribution from government bond issuance of CNY693B, marking the strongest start to the year since 2020 (Bloomberg). However, positive headline effects curbed by record low outstanding loan growth of 7.5% y/y vs prior month's 7.6%, albeit above consensus 7.3%. M2 money supply rose 7.0% y/y, below consensus 7.2% and 7.3% in prior month. Takeaways indicated the sequential surge mainly reflects seasonality as lending quotas are renewed in the new year. Broader narrative remains unchanged as underlying corporate activity remains subdued with the outlook clouded by tariff risk (Reuters). Attention remains on stimulus and economic targets from the March NPC.

  • StreetAccount Event Preview: RBA 18-Feb policy meeting

    • RBA expected to lower cash rate by 25 bp to 4.10% at its 18-Feb policy meeting. Economist expectations almost unanimous following softer-than-expected Q4 underlying CPI that signaled disinflation playing out quicker than RBA's most recent forecasts. Statement expected to note board growing more confident about inflation returning sustainably to target. Central bank now seen projecting underlying inflation returning to 2-3% target midpoint by end-2025 (vs 2026 previously). Wage growth projections also expected to be revised lower. However, any cut expected to be accompanied by cautious guidance that reemphasizes data dependency and includes discussions about two-sided risks to economic outlook. Governor Bullock also seen avoiding any signaling for April's meeting. Labor market indicators continue to convey degree of tightness and expected to prompt downgrade to unemployment rate forecasts. Consumption metrics (retail sales and household spending) also showed notable improvement over Q4 following income tax cuts and energy rebates that went into effect from 1-Jul.

  • Notable Gainers:

    • +14.2% 696.HK (TravelSky Technology): guides FY net income of not less than CNY2.05B vs year-ago CNY1.45B

    • +9% 285A.JP (Kioxia Holdings): reports 9M results with revenue of ¥1.359T, +80% y/y

    • +6.7% 4612.JP (Nippon Paint Holdings): reports Q4 revenue and operating profit ahead of FactSet estimates

    • +4.3% 3105.TT (Win Semiconductors): reports Q4 earnings; reportedly guides Q1 gross margin to remain in high-teens range with similar level of utilization rate vs previous quarter

    • +4% 700.HK (Tencent Holdings): Weixin reportedly tests access to DeepSeek AI model for in-app searches

    • +1.6% 2503.JP (Kirin): reports FY earnings with revenue ahead of FactSet estimates; guidance also ahead of the consensus

  • Notable Decliners:

    • -9.7% 7733.JP (Olympus): reports Q3 operating profit below StreetAccount estimates; lowers FY guidance

    • -3.6% 7182.JP (Japan Post Bank): reports 9M results with year-on-year decline in ordinary income

    • -2.4% 4755.JP (Rakuten Group): reports Q4 net income attributable below StreetAccount estimates

• Data:

  • Economic:

    • Japan

      • Q4 preliminary GDP q/q annualized +2.8% versus consensus +1.3% and +1.7% in prior quarter

      • December Industrial Production m/m (revised) (0.2%) versus consensus +0.3% and +0.3% in prior month

      • December Retail Sales NSA y/y +3.5% versus consensus +3.7% and +3.7% in prior month

    • Singapore

      • January Non-Oil Domestic Export NSA Y/Y (2.1%) versus +9.009% in prior month

  • Markets:

    • Nikkei: 24.82 or +0.06% to 39174.25

    • Hang Seng: (4.10) or (0.02%) to 22616.23

    • Shanghai Composite: 9.11 or +0.27% to 3355.83

    • Shenzhen Composite: 15.21 or +0.75% to 2048.64

    • ASX200: (18.70) or (0.22%) to 8537.10

    • KOSPI: 19.37 or +0.75% to 2610.42

    • SENSEX: (235.15) or (0.31%) to 75704.06

  • Currencies:

    • $-¥: (0.45) or (0.29%) to 151.8550

    • $-KRW: +1.07 or +0.07% to 1442.5200

    • A$-$: +0.00 or +0.04% to 0.6355

    • $-INR: +0.12 or +0.13% to 86.8482

    • $-CNY: +0.00 or +0.01% to 7.2549