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StreetAccount Summary - Asian Market Recap: Nikkei +0.26%, Hang Seng +3.99%, Shanghai Composite +0.85% as of 03:10 ET

Feb 21 ,2025

• Synopsis:

  • Asian equities ended mostly higher Friday. The Hang Seng was pulled substantially higher again by its IT and internet stocks with more solid gains in mainland markets too. Taiwan, Japan's main benchmarks and Southeast Asia also ended higher, South Korea was flat. More losses for India and Australia. US futures a few points higher, Europe with small gains. US dollar bouncing back from overnight losses, some weakening in yen, elsewhere quiet. Treasury yields mixed. Oil markets treading water, precious metals off recent highs, iron ore rallying from recent troughs but copper sharply lower.

  • The Hang Seng notably higher Friday to cap another very strong week after Alibaba posted better than expected quarterly earnings, and said it would 'invest aggressively' into AI over the next three years. Other large-cap technology stocks also outperformed including Kuaishou, SMIC and Tencent but Hang Seng's range was narrow with value sectors underperforming notably. Stronger sentiment lifted other Asia technology names but gains elsewhere subdued following Wall Street's negative day on Thursday.

  • In macro developments, Japan inflation topped forecasts to underpin recent BOJ hiking speculation but finance minister Kato, then PM Ishiba warned the high JGB yields were squeezing government finances, and Governor Ueda said the bank may buy more JGBs to counteract the recent surge; both JGB yields and yen came off recent highs on the comments.

  • Flash PMIs showed Japan's manufacturing output declined again, albeit at a slower pace than of late, Australia's rose to six-month highs, while India's returned to strong expansion. RBA Governor Bullock said bank's board has not committed to any course of action and remained cautious over further rate cuts. South Korea exports jumped sharply y/y in first 20 days of February although were skewed to the upside with more working days.

  • Alibaba (9988.HK) reported better-than-expected quarterly earnings and said it would aggressively invest in AI over the next three years. Citic Bank (601998.CH) and UK asset manager ABRDN are in talks to lunch an asset management joint venture in China. A FT report suggested Japan may approach Tesla over an investment into Nissan Motor (7201.JP) to support the struggling auto company.

• Digest:

  • Governor Ueda says BOJ ready to increase JGB buying to counter sharp rise in yields:

    • JGB 10-year yields fell back Friday, futures surge triggered a circuit-breaker, while yen reversed much of yesterday's strength after BOJ Governor Ueda comments in parliament. In response to a question about recent elevation in bond yields, replied that BOJ stands ready to increase JGB purchases nimbly if long yields rise sharply, while making allowances for some volatility reflecting changing market views on the economic outlook (Reuters). Indicated a response would be warranted to stabilize the market against "abnormal moves" while adding he thinks the current yield backup basically reflects improving market sentiment toward macro fundamentals (Nikkei). Some discussion about potential emergency purchase operations though Ueda's answer was circumspect. Ueda essentially reaffirmed guidance for flexible adaptation to market conditions stated in the JGB purchase tapering plan unveiled in July last year, though these were the first related comments in a while. Government wariness toward higher yield pressures on debt servicing costs came into play after Prime Minister Ishiba in the same parliamentary session expressed "strong concerns" even while confirming this wasn't discussed in yesterday's private meeting with Ueda (Bloomberg). Echoed earlier warnings from Finance Minister Kato noting Japan's public debt-to-GDP ratio will be 232.7% this year.

  • RBA Governor Bullock reiterates board is cautious about prospects for further easing:

    • In opening remarks before House of Representatives economics committee, RBA Governor Bullock said board remains data dependent though strength of labor market leaves it alert to possibility economy is stronger than assumed, which could delay disinflation process. Added RBA has not committed to any course of action, but if it eases too quickly or to much there is risk inflation settles above 2.5% target midpoint. RBA remains cautious about prospects for further easing. Rest of her prepared remarks hewed closely to Tuesday's statement and her post-meeting press conference. In follow-up Q/A, Bullock welcomed moderation in services inflation though maintained they are still targeting 2.5% and not the 2.7% forecast in Tuesday's statement, which she explained was predicated on 'unrealistic' market pricing for three more rate cuts. While economists acknowledged hawkish nature of Tuesday's 25 bp rate cut, easing expectations were kept intact with most anticipating next move occurring in May and almost 50 bp of further easing priced in by end-2025.

  • Japan nationwide CPI mostly in line:

    • Nationwide core CPI rose 3.2% y/y in January, compared to consensus 3.1%. Follows 3.0% in prior month and marks the highest since Jun-23. Ex-fresh food & energy inflation was in line at 2.5% following 2.4% in December. Headline and details generally consistent with preceding Tokyo figures. Change in energy contributions were marginal after government subsidies rolled off. Main driver was heavily weighted non-fresh food, where an acceleration added 0.18 ppt to the headline. Recent attention has turned to soaring rice prices, where a 71.8% increase alone equated to contribution of 0.26 ppt. Also, cabbage spiked 195.5% for a 0.18 ppt contribution. Elsewhere, stabilization in fixed phone line fees and faster increase in household durables were marginally positive factors. Mostly offset by major deceleration in overseas tourism packages after a surge in the prior month. Market attention elevating again amid mounting BOJ rate hike speculation though latest economist consensus poll still pointed to the next rate hike around July. Follows recent hawkish rhetoric from BOJ board members who see inflation risks skewed to the upside.

  • Japan flash manufacturing PMI edges higher though remains in contraction:

    • Flash manufacturing PMI was 48.9 in February, following 48.7 in the previous month, marking the eighth straight month in contraction. Output and new orders logged smaller declines though export contraction widened. Other details were consistent with characteristics of a negative inventory cycle. Sustained output declines prompted employment to turn negative against backdrop of spare capacity. Purchasing activity continued to fall notably alongside finished goods inventories and backlogs. Inflation metrics were firmer with strong gains in output and input prices. In contrast, services PMI edged up to 53.1 from 53.0, highest since September, buoyed by stronger gains in output, though softer growth in new business was an offsetting factor. Service sector saw weakening pressure in both output and input prices. Existing demand continued to support employment growth. Composite PMI improved to 51.6 from 51.1 with aggregate output at a five-month high, though new orders growth moderated. Notably, outlook softened to the lowest since Jan-21 attributed to labor shortages, inflation pressures and general struggles in the domestic economy.

  • India flash PMI shows strongest service sector growth in nearly a year:

    • HSBC Flash India PMI showed February composite index reached 60.6 from final reading of 57.7 in January, fastest rise in private sector activity since Aug-2024. Rate of growth was well above long-run average. Service providers noted quicker increase than manufacturers. Flash services PMI was 61.1, compared with 56.5 in January, also the strongest since Mar-2024; while flash manufacturing PMI was 57.1, softer from January's 57.7, but still much higher than long-run average of 54.1. Manufacturing slowdown attributed to competitive pressures, while service providers saw strongest growth in new business intakes in six months. Export orders collectively rose at fastest rate in seven months. There were more pronounced capacity pressures at service providers than at manufacturing counterparts. Overall rate of job creation hit a new series peak with stronger hiring in services sectors where they faced more intense cost pressures too. Overall business confidence reached to highest since Nov-2024 with improvement in confidence tilted toward goods producers.

  • Notable Gainers:

    • +40.2% 856.HK (VSTECS Holdings): subsidiary Nanjing VSTECS fully integrated with DeepSeek AI

    • +18.0% 9899.HK (NetEase Cloud Music): reports FY adjusted net income CNY1.70B vs year-ago CNY818.5M

    • +14.6% 9988.HK (Alibaba Group): reports Q3 non-GAAP EPADS CNY21.39 vs StreetAccount CNY19.47; holder Ryan Cohen is reportedly to increases stake to around $1B

    • +9.5% 7201.JP (Nissan Motor): Japanese group that includes former PM Suga is reportedly to plan approaching Tesla to invest in Nissan Motor in exchange for Nissan's US plants

    • +4.4% 4904.TT (Far EasTone Telecommunications): reports Q4 EPS NT$1.01 vs year-ago NT$0.85; proposes FY dividend NT$3.56/share vs year-ago NT$3.25/share

    • +2.0% 1795.TT (Lotus Pharmaceutical): receives acceptance of ANDA for Voclosporin soft capsules from FDA

    • +1.5% 2888.HK (Standard Chartered): reports Q4 underlying EPS $0.29 vs FactSet $0.28

  • Notable Decliners:

    • -6.5% 605499.CH (Eastroc Beverage (Group)): holder Kunpeng Equity Investment Management Co. plans to dispose up to 7.2M shares

    • -1.9% G13.SP (Genting Singapore): reports FY adjusted EBITDA SG$960.1M vs FactSet SG$973.5M

    • -0.7% 9007.JP (Odakyu Electric Railway): to improve asset efficiency by selling 4.3M-shares of Sotetsu Holdings shares

    • -0.3% 011200.KS (HMM): reportedly to look at acquiring parts of SK Shipping from Hanh & Co for $1.4B (KRW2T)

• Data:

  • Economic:

    • Japan January

      • CPI Core National y/y +3.2% versus +3% in prior month

        • CPI ex-Fresh Food and Energy +2.5% versus consensus +2.9% and +2.4% in prior month

        • CPI National y/y +4% versus consensus +3.9% and +3.6% in prior month

  • Markets:

    • Nikkei: 98.90 or +0.26% to 38776.94

    • Hang Seng: 900.94 or +3.99% to 23477.92

    • Shanghai Composite: 28.33 or +0.85% to 3379.11

    • Shenzhen Composite: 32.09 or +1.56% to 2088.82

    • ASX200: (26.60) or (0.32%) to 8296.20

    • KOSPI: 0.52 or +0.02% to 2654.58

    • SENSEX: (467.86) or (0.62%) to 75268.10

  • Currencies:

    • $-¥: +0.88 or +0.59% to 150.5110

    • $-KRW: +0.23 or +0.02% to 1432.9300

    • A$-$: (0.00) or (0.08%) to 0.6392

    • $-INR: +0.21 or +0.25% to 86.6839

    • $-CNY: (0.01) or (0.13%) to 7.2466