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StreetAccount Summary - Asian Market Recap: Nikkei (1.24%), Hang Seng (1.60%), Shanghai Composite (0.02%) as of 03:10 ET

Feb 20 ,2025

• Synopsis:

  • Asia markets ended mostly lower Thursday. Hong Kong dragged sharply lower by IT and internet names, Shenzhen rallied to close slightly higher but the rest of mainland China was lower. Losses elsewhere, including Japan's main boards, South Korea, Taiwan and Australia. India trading lower again, Southeast Asia down but relative outperformers. US futures lower, Europe opened with modest gains. US dollar dipping following overnight spike, yen at three-month low, yuan strengthening, other Asia forex crosses stronger. Treasuries mixed, JGB 10Y yields above 1.4% and at its highest in 15 years, CGB yields also consolidating recent gains. Crude oil futures down, gold at fresh record high, industrial metals edging higher.

  • Asia markets seeing some evidence of profit taking especially in Hong Kong's technology names as several stocks reached technical overbought levels. Investors also used the increased geopolitical tensions over Ukraine, and fresh tariff talk, to take risk off the table, brushing off Trump comments over a possible wider US-China trade deal. Japan stocks fell while JGB yields spiked to send the yen to three-month lows against the dollar amid growing speculation the BOJ will hike rates sooner than previously thought. CGBs were steady just as 1Y and 5Y LPRs were left unchanged, as expected.

  • Elsewhere, Australian employment growth against came in much stronger than forecast while the unemployment rate rose in-line with forecasts. South Korea consumer sentiment rose for a second consecutive month but producer inflation remained elevated at 1.7%. Meanwhile, the country's president Yoon Suk Yeol attended his own criminal trial for the first hearing on his insurrection charges.

  • Murata Manufacturing (6981.JP) is considering deals of up to $665M in inductors and sensors to drive growth, according to its CEO. KKR has won control of Fuji Soft (9749.JP) via a tender offer after Bain Capital decided against raising its offer price for the company. A DeepSeek funding round has drawn interest from China state funds and Alibaba (9988.HK), according to press reports. Pilbara Minerals (PLS.AU) CEO said it he sees lithium demand recovering as it restarts a China-based mine and refinery. Rio Tinto's (RIO.AU) and Fortescue Metals (FMG.AU) both reported lower earnings due to the slide in iron ore prices. Ayala Land (ALI.PM) said it is to raise up to $1.3B from the debt market and will launch more residential projects this year.

• Digest:

  • China LPRs unchanged as expected:

    • LPRs were unchanged at 3.10% in 1-year and 3.60% in 5-year in line with Reuters expectations, keeping policy rates steady for the fourth straight month. Dynamics seen as more balanced with ongoing easing constraints from negative yuan and bank NIM implications mixed with increasing pressure to respond to tariff risk. PBOC said in Q4 monetary policy report that it would adjust monetary policy at appropriate time to support economy amid rising external headwinds, consistent with earlier view that central bank is saving policy bullets if US-China trade tensions were to escalate. Meanwhile, Governor Pan's recent comments have emphasized yuan stability as key to global financial stability (Reuters). Noted record bank lending in January (Reuters) lessens the need for immediate action, contrasting with earlier subdued takeaways given the broader soft trend in monetary aggregates. Little change in the narrative otherwise. Market rhetoric on easing expectations has receded lately with the March NPC approaching and shifted to a wait-and-see mode following extended debate and stimulus speculation from the latter part of last year.

  • Australian jobs growth tops forecasts, unemployment rate edges higher:

    • Australian economy added 44K jobs in January, step down from December's 56.3K gain but more than double consensus for a 20.0K increase. Composition was strong with 54.1K full-time positions added and 10.1K part-time jobs lost. Unemployment rate climbed to in-line 4.1% from 4.0%, driven by unexpected rise in participation rate to record high of 67.3% from 67.1%. ABS attributed some of January's rise in unemployment rate, and decline in monthly hours worked, to holiday effects as more people with jobs than usual were waiting to start or return work, continuing pattern over past three Januarys. Underemployment rate was steady at 6.0%. RBA on Tuesday strengthened language on labor market tightness following run of hotter-than-expected data that prompted downward revision to unemployment rate forecasts to 4.2% through forecast horizon. Governor Bullock also said RBA is focused on wage pressures and Wednesday's data showed wage growth slowed over Q4. Markets still pricing in ~80% chance of May rate cut and almost 50 bp of further easing over 2025.

  • Trump signals openness to new deal with China:

    • Speaking to reporters on Wednesday, President Trump voiced openness to a deal with China. However he did not provide color on what a deal would involve and whether it would entail a tariff rollback (Bloomberg). Follows NY Times article that cited current and former advisers to Trump, and others familiar with this thinking, who said president would like to reach wide-ranging deal with President Xi that extends beyond trade. Trump said to be interested in deal that involves substantial China investments in US, commitment to purchase more American goods, and agreement on non-trade issues such as nuclear weapons security. China would likely demand removal of tariffs and export controls in return. White House already conducting internal debates with Treasury Secretary Bessent and Commerce Secretary Lutnick weighing proposals that could rebalance trade. However, China said to be wary given Trump's unpredictability and analysts harbor skepticism of a wide-ranging deal given broader tensions in trade, technology and geopolitical spheres. White House China hawks including Secretary of State Rubio and National Security Adviser Waltz also view Chinese investment in US as national security risk.

  • Asia currencies rally on hopes of China-US trade deal, hawkish BOJ comments:

    • Asia currencies seeing more relief from a strong US dollar Thursday on hawkish commentary over BOJ's rate hike path, comments from President Trump on wider trade deal with China. Yen rallied almost 1.5% so far this week and almost 5.0% YTD, spiked sharply again Thursday as investors increased conviction BOJ would hike sooner rather than later (Reuters). JGB 10Y bond yield also rose to 15-year high 1.4% on similar trades. Yuan bounced back from three consecutive days of losses on Trump's comment on deeper trade deal however analysts cited by Reuters warned message could prove only temporary reprieve as PBOC remains firmly in easing cycle to counter weak economic growth. Other Asia currencies adding to February gains with AUD and NZD near two-month highs, Southeast Asia forex led by Thai baht, India's rupee bouncing back from record lows albeit just 1.6% off record low against the US dollar.

  • BOJ still seen hiking one more time this year, terminal rate forecasts unchanged:

    • Latest Reuters poll (n=61) found consensus still looks for only one more BOJ rate hike this year. All respondents forecast no change at the March 18-19 MPM. Follows extensive hawkish market rhetoric of late, including some speculation of either a faster pace of hikes or a higher terminal rate. Yet, survey forecast for the terminal rate was unchanged at 1.00% while estimates ranged between 0.75% and 2.00%. Small minority predicted the chance of a move in Q2, though majority concentrated in Q3 (July or September). Sub-sample of specific months showed majority 23 out of 39 picking July, with others spread around June, April and September. Cited thoughts that BOJ needs time to confirm magnitude of rate hikes out of the shunto talks, permeation to small and medium-sized firms as well as evaluating impacts from the January hike. Median forecast for wage hikes revised up to 5% from 4.75% last month. Median policy rate projection was 0.75% at year-end and 1.00% in March -- latter breaking from previously established expectations of a semi-annual pace.

  • Notable Gainers:

    • +5.0% 23.HK (The Bank of East Asia): reports FY net income attributable HK$4.61B vs StreetAccount HK$3.91B

    • +4.3% 6723.JP (Renesas Electronics): to release RA4L1 with ARM core and to launch 14 products for mass production

    • +3.7% 11.HK (Hang Seng Bank): chairman Irene Lee to retire after next AGM in May

    • +3.3% 8524.JP (North Pacific Bank): to launch up-to-¥3.20B buyback, to run from 25-Feb through 40-Apr

    • +1.5% 7269.JP (Suzuki Motor): guides FY30 revenue ¥8T vs prior guidance ¥7

  • Notable Decliners:

    • -6.4% 992.HK (Lenovo Group): reports Q3 net income attributable $692.7M vs StreetAccount $379.7M

    • -6.6% 3690.HK (Meituan): will gradually pay social security for full-time and stable part-time workers; expects to start in 2Q25

    • -0.5% 2633.TT (Taiwan High Speed Rail): reports FY EPS NT$1.15 vs year-ago NT$1.39

    • -0.1% 8031.JP (Mitsui & Co.): to buy 40% stake in the Rhodes Ridge iron ore project in Australia for a total consideration of $5.34B

• Data:

  • Economic:

    • Australia January

      • Employment +44.0K m/m vs consensus +20.0K and +56.3K in December

        • Unemployment rate 4.1% vs consensus 4.1% and 4.0% in December

        • Participation rate 67.3% vs consensus 67.1% and 67.1% in December

  • Markets:

    • Nikkei: (486.57) or (1.24%) to 38678.04

    • Hang Seng: (367.26) or (1.60%) to 22576.98

    • Shanghai Composite: (0.76) or (0.02%) to 3350.78

    • Shenzhen Composite: 11.18 or +0.55% to 2056.72

    • ASX200: (96.40) or (1.15%) to 8322.80

    • KOSPI: (17.46) or (0.65%) to 2654.06

    • SENSEX: (258.90) or (0.34%) to 75680.28

  • Currencies:

    • $-¥: (1.25) or (0.83%) to 150.2240

    • $-KRW: (3.48) or (0.24%) to 1437.4900

    • A$-$: +0.00 or +0.43% to 0.6372

    • $-INR: (0.35) or (0.40%) to 86.5760

    • $-CNY: (0.02) or (0.24%) to 7.2666