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StreetAccount Summary - Asian Market Recap: Nikkei +0.30%, Hang Seng (0.29%), Shanghai Composite +0.23% as of 03:10 ET

Feb 27 ,2025

• Synopsis:

  • Asia equities traded mixed Thursday: Technology-dominated South Korea and Taiwan led decliners with Southeast Asia also seeing fresh losses. Modest gains for Japan and Australia. Greater China mixed as Shanghai ended higher, but Shenzhen and Hong Kong were slightly lower. India unchanged as it returns from holiday. US futures higher, Europe opened with losses as they caught up with overnight Wall Street moves. US Dollar marginally higher, Asia currencies with little movement of note. Treasury yields mostly higher with the 10Y bouncing off a key support level, Asia yields inching higher. WTI oil futures flat, Brent steeply lower. Precious metals notably down. Industrials again under pressure. Cryptocurrencies bouncing back from recent lows.

  • Another directionless day for Asia equities with technology led boards largely failing to follow through from an uptick into the close on Wall Street and instead focusing on Nvidia's underwhelming Q1 guidance. Hong Kong saw a choppy day with some weakness detectable in its IT and internet names that have driven the broader index higher this month. Trade and geopolitics back in the headlines after President Trump gave confused messages over Canada and Mexico tariffs, said he'd welcome Chinese investment into the US, but also refused to commit to protecting Taiwan from a Chinese invasion.

  • Nissan Motor (7201.JP) is preparing to replace its CEO Uchida after poor earnings and the collapse of the proposed merger with Honda Motor. A group including Seven & i's (3382.JP) founding Ito family and Itochu Group (8001.JP) failed to raise sufficient funding to submit a definitive proposal to acquire the company. Beijing said it would recapitalize its largest banks including Agricultural Bank of China (1288.HK), Bank of Communications (3328.HK), and Postal Savings Bank (1658.HK) by the end of June. China Evergrande (3333.HK) has appointed liquidators for its Tianji subsidiary following a Hong Kong High Court order. China Galaxy Securities (6881.HK) and China International Capital (3908.HK) denied reports earlier in the week that said they were considering a merger. Vedanta Ltd (500295.IN) shareholders approve plans to split the company into five separate business units to be completed by Q1-2025/26.

• Digest:

  • China said to be planning bank capital injections:

    • Bloomberg sources said Chinese authorities planning fresh capital injections for three major banks in coming months of at least CNY400B ($55B). This would mark the first such move since the global financial crisis in 2008. Recipients said to be Agricultural Bank of China (1288.HK), Bank of Communications (3328.HK) and Postal Savings Bank of China (1658.HK). Plan could be completed as soon as June-end. Individual amounts still being worked out. Article recalled banking regulator last September signaled replenishment of core tier-1 capital for the six top state lenders. Finance Minister Lan Fo'an said in October that funding would come from special sovereign bond issuance. Earlier indications were that capital injections could be as much as CNY1T. MOF had noted average core tier-1 capital adequacy ratio was 12.3% as of June-end with all key metrics remaining healthy. While six major banks have capital levels well above requirements, fresh infusion would shore up buffers to help regulators follow through on last year's wave of stimulus measures from broad reductions to mortgage rates to slashing key policy rates.

  • Seven & i confirms founding family buyout proposal scrapped after Itochu withdraws:

    • Seven & i (3382.JP) statement said they were notified the Ito founding family was unable to obtain required financing for their MBO plan, hence there is no actionable proposal to consider. Reaffirmed Seven & i still considering Alimentation Couche-Tard's offer. Special committee engaging constructively to determine if a viable proposal can be achieved that addresses serious US antitrust challenges. Dominos fell after Itochu (8001.JP) withdrew from talks, leaving the MBO proposal underfunded. Out of the JPY8T ($53.5B) acquisition cost, Nikkei reported Itochu was considering a JPY1T investment but determined its participation would not create enough synergies with its own food businesses to justify such an investment. Article noted a third strategy remains under review for Seven & i to remain independent. However, its expansion plans -- 30 countries, 100K stores, targeting sales of more than JPY30T ($201.1B) by Mar-31 -- have not been well received by the market, leaving its share price below Couche-Tard's offer of $18.19 per share. Shares closed down 10.95% at JPY2,118 ($14.18) Wednesday. Warned that a rejection of Couche-Tard's offer would be difficult to justify to shareholders.

  • Nissan said to be preparing to oust CEO, Fitch completes trifecta of credit rating downgrades to junk:

    • Bloomberg sources said Nissan (7201.JP) planning to replace CEO Makoto Uchida in the wake of dismal earnings and failed merger talks with Honda (7267.JP). Directors said to be gauging interest in potential candidates to succeed Uchida who has held the position since 2019. Uchida said at the previous earnings briefing that while he was prepared to step down if asked, he did not want to move until restructuring plans were on track. Guided FY net loss of JPY80B ($536M) in sharp contrast to initial forecasts for a JPY380B profit. Bloomberg projected Nissan facing debt wall of a record $5.6B due in 2026 denominated in yen, dollars and euros. Near term outlook remains grim. Fitch was the latest to downgrade Nissan's credit rating to junk, joining S&P's and Moody's. Fitch cut its rating to "BB+" from "BBB-," citing persistent low profitability with the recovery trajectory falling short of expectations. Sees auto segment EBIT and free cash flow remaining negative until fiscal year ending Mar-26, though some consolation from strong liquidity position and solid balance sheet. Reaffirmed negative outlook reflecting uncertainty over the restructuring plan, expected to reasonably cut costs, but vulnerable to US tariffs, weak auto demand in US and South-East Asia as well as rising incentives in US. Warned any delay in progress could lead to another negative rating action.

  • Japan birth rate falls to record low in 2024, deepening demographic crisis:

    • Japan's health ministry said country's birthrate fell for ninth consecutive year in 2024 to lowest since records began in 1899 of 720,988. Number of deaths rose 1.8% to record high 1.62M, meaning death-to-birth ratio of two-to-one (JapanTimes). FY24 birthrate represents 5% y/y decline, below 779K births forecast by government-backed think tank but marginally higher than worst-case scenario forecast of below700K (Kyodo). Ministry said combination led to largest ever annual population decline in 2024. Demographers said long-term repercussions accelerating for Japan economy which has seen workforce shrink annually since 1995, will likely see worker shortfall of 11M by 2040 according to Recruit Works Institute. Bloomberg cited second think tank Teikoku Databank that noted 342 Japan-based companies went bankrupt in 2024 because of labor shortages. Japan's aging population means government must spend more on care - next fiscal year starting April will see 20% increase in social security spending to ¥37.7T ($253B) despite relatively stable unemployment rate.

  • Nvidia earnings mostly positive, though beat rate remains well off peak:

    • Early takeaways from Nvidia (NVDA) earnings were broadly positive on the back of the headline Q4 EPS and revenue beat vs StreetAccount consensus. Main blemish was declining gross margins; while Q4 was in line, Q1 guidance was lower than expected. Main revenue factor was higher than expected datacenter sales, outweighing miss in gaming. Much attention remains on Blackwell; CEO Huang said demand was "amazing." CFO Kress noted Blackwell sales were led by large cloud service providers which made up about 50% of datacenter revenue. Blackwell and Hopper AI chips now account for 91% of total revenue, up from 83% a year ago and 60% in the same period of 2023 (CNBC). Reuters suggested guidance will help allay doubts about slower demand in the wake of DeepSeek emergence and could reinvigorate the spluttering AI rally. In contrast, Bloomberg's take was more cautious, describing the results as good but not great, in a continuation of relatively underwhelming results compared to blowouts in the past. Noted magnitude of the Q4 revenue beat was the smallest since Feb-23 while Q1 guidance was well short of the upper end of expectations.

  • Notable Gainers:

    • +7.9% 009830.KS (HANWHA SOLUTIONS): South Korea government reportedly planning to abolish Renewable Energy Certificate system

    • +4.3% 8001.JP (ITOCHU): decided not to participate as strategic partner in founding family's acquisition proposal of Seven & i; consortium proposing buyout of Seven & i has been unable to secure financing required to acquire the company

    • +3.7% 7201.JP (Nissan Motor): reportedly looking for potential candidates to succeed CEO Makoto Uchida

  • Notable Decliners:

    • -38.1% 1860.HK (Mobvista): in talks with potential buyers for Mintegral and marketing technology businesses

    • -11.0% 3382.JP (Seven & i): consortium proposing Seven & i buyout has been unable to secure financing required to acquire the company

    • -9.4% 2049.TT (HIWIN Technologies): reports FY results with EPS below FactSet estimates

    • -3.5% 3908.HK (China International Capital): China International Capital and China Galaxy Securities state their controlling shareholders have no plans to merge the two companies

    • -2.9% 2327.TT (Yageo): prepared to follow through with proposed acquisition of Shibaura Electronics even if target company does not consent

    • -1.6% 6881.HK (China Galaxy Securities): China International Capital and China Galaxy Securities state their controlling shareholders have no plans to merge the two companies

    • -0.1% 83.HK (Sino Land): reports H1 underlying profit attributable HK$2.24B, (24%) vs year-ago HK$2.95B

• Data:

  • Economic:

    • Australia Q4

      • Private capital expenditure (0.2%) q/q vs consensus +0.5% and +1.1% in Q3

    • New Zealand February

      • ANZ Business Confidence +58.4% versus +54.4% in prior month

  • Markets:

    • Nikkei: 113.80 or +0.30% to 38256.17

    • Hang Seng: (69.64) or (0.29%) to 23718.29

    • Shanghai Composite: 7.85 or +0.23% to 3388.06

    • Shenzhen Composite: (5.49) or (0.26%) to 2091.66

    • ASX200: 27.50 or +0.33% to 8268.20

    • KOSPI: (19.34) or (0.73%) to 2621.75

    • SENSEX: 12.71 or +0.02% to 74614.83

  • Currencies:

    • $-¥: +0.08 or +0.05% to 149.1760

    • $-KRW: +7.31 or +0.51% to 1442.1300

    • A$-$: (0.00) or (0.09%) to 0.6299

    • $-INR: +0.02 or +0.03% to 87.2121

    • $-CNY: +0.01 or +0.09% to 7.2666