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StreetAccount Summary - Asian Market Recap: Nikkei (0.25%), Hang Seng +3.27%, Shanghai Composite +1.02% as of 03:10 ET

Feb 26 ,2025

• Synopsis:

  • Asia equities ended mixed Wednesday. Hang Seng surged to fresh multi-year highs as their internet and IT names rose sharply. Mainland China boards also higher gains here less pronounced. South Korea and Taiwan ended higher, several Southeast Asia boards gained. New Zealand bounced back a little from six consecutive days of losses. Japan, Australia and Singapore all lower. India closed for a holiday. US futures higher, Europe opened with strong gains. US dollar gaining to follow overnight losses; yen weaker alongside AUD and NZD, yuan is flat. Treasury yields higher across tenors. WTI crude futures still below $70/bl but a little higher on the day, Brent sharply down. Precious metals higher, copper substantially higher on threat of tariffs, iron ore lower on China steel export worries. Cryptocurrencies recovering some ground.

  • Asia assets struggled for a firm direction Wednesday as trade uncertainty joined US economic weakness to clash with increasing optimism over China's technology sector. Trump's confusing messages over on-again, off-again Mexico and Canada tariffs, and talk of a security review over copper imports that could pave the way for a new set of tariffs on metals, setting off alarm bells among Asia exporters but the region dominated by a fresh surge in China-based, Hong Kong listed technology names after DeepSeek reopened its core programming interface, a key component in its AI model adoption. This sent the broad Hang Seng index to an almost three-year high and its tech index to highs not seen since Oct-21.

  • Australia CPI inflation unchanged at RBA's 2.5% target midpoint in January although underlying inflation ticked higher. Singapore industrial output rose 9.1% in January y/y with its key electronics sector expanding 18.9%. The Bank of Thailand unexpectedly trimmed its base interest rate by 25 bps to support the economy and aid the weak baht. Hong Kong's annual budget will see 10K civil servants lose their positions, others to see pay freezes while the government will also invest HK$1B into an AI research center.

  • Japan Post Holdings (6178.HK) said it is planning to reduce its stake in Japan Post Bank (7182.JP) to below 50%, raising up to ¥600B; Japan Post Bank said to be considering share buyback. State-owned CICC (601995.CH) is to merge with Galaxy Securities (6881.HK) to form China's third largest brokerage. Hyundai Rotem (064350.KS) has won its largest ever supply order for its electric trains worth $1.5B from Morocco. OCBC (039.SP) missed on its annual profit forecast but unveiled a $1.9B capital return program. Samsung Electronics (005930.KS) is reportedly mulling the acquisition of CLASSYS (214150.KS). Merdeka Battery (MBMA.IJ) is to build a $1.8B nickel processing plant in Indonesia.

• Digest:

  • China NPC to focus on private consumption as Trump impacts loom:

    • Bloomberg previewed the National People's Congress (NPC) commencing 5-Mar. Highlighted main focus will be on measures to boost consumer spending amid Trump tariff threats and the ongoing property slump. Market attention will be on strength of any new stimulus and broader policy signals, particularly after the recent surge in China tech stocks fueled by DeepSeek, which may sustain the rally. However, content did not hint at major new announcements, largely recounting information from prior reports with developments largely qualitative. Reaffirmed official growth target likely to remain at 'around 5%' this year. Also suggested inflation target may come in at 2%, below 3% for the first time in over two decades in an acknowledgement of lingering deflation risks, though clarified this metric is treated as a ceiling rather than a binding target. Consumption measures may include expansion of the consumer goods trade-in program, pension payouts for retirees, social insurance subsidies and household childrearing financial support. Recalled President Xi's recent meeting with business leaders was a clear acknowledgement of the importance of private sector activity to drive growth and opens up prospects for policy support, though recent pledges have outlined structural/legal enhancements.

  • Australian monthly inflation unchanged, but underlying measure ticks higher:

    • Australia monthly inflation held at 2.5% y/y in January against expectations for an uptick to 2.6%. Figure influenced by seasonal factors with international airfares falling following peak holiday season in December. Excluding volatile items such as food, fuel and holiday travel, CPI inflation rose to 2.9% from 2.7%. Energy subsidies helped dampen inflation though electricity prices fell at a slower pace as state rebates were used up and prices rose sharply. Excluding energy, trimmed mean inflation rose to 2.8% from 2.7%. While rental inflation eased, education, health and insurance categories remained elevated. Generally accepted that monthly CPI's limitations lessen its signal importance for monetary policy with RBA putting greater emphasis on the quarterly series (Q1 CPI due on 30-Apr). Following February's hawkish rate cut, Governor Bullock stressed board is cautious about prospects of further easing amid concerns strong economy and labor market will delay disinflation process. Still, economists still expect RBA to follow up with another 25 bp rate cut in May.

  • Bank of Thailand unexpectedly cuts benchmark interest rate by 25 bp:

    • Thailand's central bank surprised by cutting benchmark 1D repo rate 25 bps to 2.0% with six of seven MPC members voting for trim just two months after saying global uncertainties meant preserving policy space was appropriate. Also comes after last minute cabinet letter to BoT in which it urged bank to cut rates to help ensure inflation stayed within targeted 1-3% range, joining IMF in calling for lower interest rates (BangkokPost). Bank said it cut rates to support economy, help weaken baht to aid exports (BangkokPost), added it expected economy to grow at slower pace than previously expected due to structural problems in industrial sector, foreign competition, higher trade risks. Acknowledged inflation had dipped but added though it was not at a level that indicated deflation, downside risks from oil prices and domestic energy subsidies remained. Thailand's equity SET index gained on the news while baht retained weakness.

  • Trump orders probe into US copper imports that paves way for potential tariffs:

    • On Tuesday President Trump signed executive order directed Commerce Secretary Lutnick to investigate national security implications of copper imports, noting US faces significant vulnerabilities in copper supply chain amid increased reliance on foreign sources. Lutnick said probe also extends to products that include copper. Order paves way for potential tariffs, export controls or incentives to boost domestic production (Bloomberg, Reuters). Trade Adviser Navarro singled out China for its role in global dumping as a strategy to drive out foreign rivals though US imports most of its copper from Chile (38% of total volumes), followed Canada (28%) and Mexico (8%). Net copper imports represented 36% of US demand according to Morgan Stanley and US officials argued nation faces future copper shortage amid rising demand from EVs and AI applications. Trump is using same authority under S.232 of Trade Expansion Act to levy 25% tariffs on steel and aluminum imports from next month. Meanwhile, reciprocal tariffs also set for early April and on Monday Trump said 25% tariffs on Canada and Mexico on track for implementation early March.

  • Japan risk aversion prompts rotation into defensives:

    • Nikkei discussed equity market developments Wednesday with Nikkei 225 breaking below 38K for the first time since 2-Dec on an intraday basis. Observed a rotation out of growth/tech into defensives such as food products (one of the few sectors tracking gains Wednesday as of early afternoon). Caution accentuated by upcoming Nvidia (NVDA) earnings. Semis under pressure -- Tokyo Electron (8035.JP) down nearly 7% -- following reports about US ramping up restrictions on China's access to chips. Growth stocks softer despite lower bond yields that would usually support valuations. Notable impacts on gaming stocks -- Capcom (9697.JP) down 6% leading sharp losses in Nintendo (7974.JP), Konami (9766.JP) -- also surprising given sector earnings optimism. Cited thoughts this reflects risk aversion stemming from recent weakness in US economic data. Among defensives, mentioned Aeon (8267.JP) as a bright spot as shares go ex-dividend tomorrow. Article looked to Nvidia earnings as the key checkpoint as DeepSeek emergence raised questions about the sustainability of AI hyperscalers. However, a positive result would still leave the overhang from China chip restrictions, leaving the outlook uncertain. Market appears to be bracing for more downside with increased buying in Nikkei out of the money put options at the 37K and 35K strikes.

  • Notable Gainers:

    • +10.5% 1876.HK (Budweiser Brewing Co. APAC): reports FY earnings with normalized profit attributable ahead of StreetAccount estimates; CEO Jan Craps to depart company to pursue other opportunities; Global Supply Chain Operations Chief Yanjun Cheng appointed replacement

    • +8.7% 068270.KS (Celltrion): reports Q4 results with revenue ahead of FactSet estimates

    • +4.4% 008930.KS (Hanmi Science Co.): reportedly to appoint Kim Jae-kyo as new CEO

    • +0.8% 352820.KS (HYBE Co.): reports Q4 results with revenue ahead of FactSet estimates

    • +0.0% 214150.KS (CLASSYS): Samsung Electronics reportedly considering acquiring

  • Notable Decliners:

    • -16.6% 522.HK (ASMPT): reports Q4 results with net income attributable below StreetAccount estimates

    • -9.2% 772.HK (China Literature): guides FY non-IFRS net income CNY1.10-1.15B

    • -3.1% 3037.TT (Unimicron Technology): reports FY earnings with EPS below FactSet estimates

    • -2.0% O39.SP (Oversea-Chinese Banking Corp.): reports Q4 earning with NPAT below StreetAccount estimates; plans to return SG$2.5B of capital to shareholders over two years via special dividends and share buybacks

    • -1.3% 9202.JP (ANA HOLDINGS): to buy at least 68 planes from Boeing, Airbus, Embraer

    • -1.2% 5871.TT (Chailease Holding): reports Q4 results with EPS below FactSet estimates

• Data:

  • Economic:

    • Australia January

      • CPI +2.5% y/y vs consensus +2.6% and +2.5% in December

        • Trimmed mean CPI +2.8% y/y vs +2.7% in December

  • Singapore January

    • Manufacturing production y/y +9.1% versus +5.2% in prior month

• Markets:

  • Nikkei: (95.42) or (0.25%) to 38142.37

  • Hang Seng: 753.91 or +3.27% to 23787.93

  • Shanghai Composite: 34.17 or +1.02% to 3380.21

  • Shenzhen Composite: 22.83 or +1.10% to 2097.14

  • ASX200: (11.20) or (0.14%) to 8240.70

  • KOSPI: 10.80 or +0.41% to 2641.09

  • SENSEX: 0.00 or 0.00% to 74602.12

• Currencies:

  • $-¥: +0.39 or +0.26% to 149.4140

  • $-KRW: +0.17 or +0.01% to 1431.2000

  • A$-$: (0.00) or (0.27%) to 0.6328

  • $-INR: (0.09) or (0.11%) to 87.0414

  • $-CNY: +0.00 or +0.04% to 7.2552