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StreetAccount Summary - Asian Market Recap: Nikkei (1.20%), Hang Seng (0.28%), Shanghai Composite +0.22% as of 03:10 ET

Mar 04 ,2025

• Synopsis:

  • Asia equities fell almost everywhere Tuesday. Sharp losses in Japan and Taiwan, with modest declines in South Korea, Australia and India. China markets opened in the red but Shenzhen and Shanghai rallied to end slightly higher while the Hang Seng dipped into the close. Southeast Asia saw some steep losses especially among the more trade-exposed benchmarks. US futures slightly higher but well off their peaks, Europe opened steeply lower with German auto makers notably lower. US dollar weaker again but is volatile; yen and offshore yuan slightly stronger, AUD weaker. Treasuries mixed, JGB yields higher. Crude prices lower on tariff announcements, precious metals higher; copper and iron ore under pressure

  • Asia markets rocked first thing by Wall Street's selloff late Monday as well as news that filtered out early on that confirmed the White House was driving through 25% tariffs on Mexico- and Canada-made products, and doubling China's tariff to 20%. All three countries hit back with reciprocal measures with Beijing imposing tariffs of up to 15% on several farm products, and added ten US firms to its unreliable entity list and 15 others to its export control list. However, although several agriculture commodity prices were volatile over the Asia trading day, equities, forex and bond markets showed a relatively muted response with many equity boards recovering from early lows.

  • In other developments, Japan's MOF corporate capex survey showed an unexpected decline; consumer sentiment read the lowest in two years while separate data showed unemployment inched higher and above expectations. South Korea's February PMI declined slightly while separate data showed the country's industrial production shrank y/y in January and retail sales were flat, matching the trajectory of January's PMIs. RBA minutes reiterated board's caution about prospects of further easing.

  • TSMC (2330.TT) unveiled a $100B investment package into advanced chipmaking in the US. BYD (1211.HK) raised $5.6B in a Hong Kong share sale in Hang Seng's biggest shares sale in four years. Seven & i (3382.JP) is set to reject Couche-Tard's proposed takeover offer, according to local Japan press. India's financial crime agency accused Paytm (One 97 Communication, 543396.IN) of violating India's forex rules. Grab (GRAB) is to buy a chain of Malaysian supermarkets as it looks to expand its physical grocery store offering in Southeast Asia.

• Digest:

  • China, Canada and Mexico respond to Trump's tariffs:

    • China's Ministry of Finance announced 15% tariffs on US chicken, wheat, corn and cotton, and 10% tariffs on sorghum, soybeans, pork, beef, seafood, fruits, vegetables and dairy. It also added ten US firms to its unreliable entity list and 15 others to its export control list (Bloomberg). Move is in retaliation for White House announcement that it would proceed with 25% tariffs on Canada- and Mexico-made goods, and doubling China tariff rate to 20%. Canada will proceed with plans to impose 25% tariffs on CAD30B ($20.6B) of US goods, which will be followed by second round of tariffs on CAD125B that take effect in three weeks (Bloomberg). PM Trudeau added discussions also underway about non-tariff measures. Mexico President Sheinbaum said plans in place to respond though didn't provide details. Commerce Secretary Lutnick recently highlighted measures by those countries to curb flow of fentanyl into US, though Trump maintains efforts have been insufficient. Situation puts countries at risk of tit-for-tat escalation after White House executive order in early February noted Trump may increase tariffs or expand their scope in response to any retaliation.

  • Trump raises prospects for additional tariffs on China, Japan based on weak currencies:

    • US President Trump remarks at the White House on tariff justifications included criticism of weak currencies in China and Japan as unfair for the US (Reuters). Further promoted tariffs as an easy equalization measure. Added he had spoken with China President Xi and Japan leaders, telling them they could not continue to devalue their currencies, though did not specify whether the calls took place during his first or current term. Japan Finance Minister Kato promptly denied Japan has a weak yen policy. Recent Nikkei coverage warned of potential FX scrutiny, citing comments from Treasury Secretary Bessent. Latest article discussed the possibility of US reciprocal tariffs based on alleged currency manipulation that would qualify as a non-tariff barrier. Another angle specifically raised by Bessent was an implication that Washington could look into a country's efforts on "interest rate repression" which could be grounds for currency manipulation. Previously, many had thought the main target would be China, which has the largest trade surplus with the US with a "moderately loose" monetary policy. Japan's trade surplus with US is less than a quarter of China's and BOJ in a rate hike phase. Yet, story cited a view from a consultant close to Bessent noting he is concerned the yen is too weak and BOJ moving too slowly to normalize policy.

  • South Korea manufacturing conditions little changed in February, PMIs show:

    • South Korea February PMIs underperformed Asia peers as output, new orders rose only marginally, employment fell, and optimism remained subdued. S&PGlobal said survey revealed soft domestic demand conditions, uncertain outlook. Purchasing activity was stable with firms reluctant to hold excess inventory. Overall PMI reading fell to contractive 49.9 from 50.3 in January. Contrasts other Asia PMIs released yesterday which showed broad growth in output, new orders, especially in Taiwan and parts of Southeast Asia. Separately, official data released Tuesday showed industrial output fell 3.5% y/y, retail sales were flat, and facility investment weakened in all major categories in January, although decline influenced by fewer working days caused by early lunar new year holiday. Nevertheless, weakness matched trajectory South Korea January PMIs showed as country reeled from martial law declaration in early December (Yonhap).

  • Japan Q4 MOF corporate survey headline capex surprisingly negative, jobless rate steady:

    • MOF corporate survey capex fell 0.2% y/y in Q4, contrasting with expectations of 5.0% growth. Follows 8.1% increase in the prior quarter. Ex-software GDP input was more in line at 3.1% growth vs consensus 4.7% and 9.5% in Q3. Notable deceleration was greater than Q4 first preliminary GDP nominal capex growth of 3.9% y/y following 5.5%. Seasonally adjusted sequential growth of 0.6% q/q was somewhat softer than GDP capex growth of 1.1%. Sector profile leaned negative and contrast between headline and ex-software series reflected similar developments in non-manufacturing where declines were led by IT and construction. Pipeline dynamics recovered as current profits rebounded 13.5% y/y from a prior 3.3% drop against the backdrop of steady moderate growth in sales. Separately, labor market data were little changed. Unemployment rate was steady at 2.5% after prior month was revised up, compared to consensus 2.4%. Sequential growth in labor force was absorbed by equivalent increase in total employment. Job offers to applicants ratio edged up to 1.26 vs consensus and prior month's 1.25, as offers rose for the first time since Feb-24.

  • RBA says February rate cut does not commit it to further reductions:

    • According to February RBA minutes decision to cut by 25 bp last month did not bind board to further rate cuts and future decisions will remain guided by incoming data. While board grew more confident about inflation returning to target, it was cautious about prospects for further easing amid concerns cutting prematurely will add to inflation pressures. Board debated whether to hold or cut in February as it balanced recent trends in inflation and wages, and downside risks to economic growth, against tight labor market conditions and risk of quicker pickup in economic growth. Decided to go with rate cut with Q4 inflation declining by more than expected and output growth remaining subdued amid weak private demand. However, board tempered that assessment by noting output likely still above potential level amid strong growth in employment and signs consumption growth picked up in Q4, keeping underlying inflation above 2.5% target midpoint over forecast period. Board members affirmed commitment to returning inflation to 2.5%.

  • Notable Gainers:

    • +18% 012450.KS (HANWHA AEROSPACE): European countries reportedly have committed to higher defence spending

    • +2.9% 1268.HK (China MeiDong Auto Holdings): guides FY; analysts broadly note core earnings beat expectations

    • +2.8% 000651.CH (Gree Electric Appliances Inc of Zhuhai): holder Jinghai Internet Technology plans to increase stake by up to CNY2.10B

  • Notable Decliners:

    • -21% 001570.KS (KUM YANG): reports FY results; Korea Exchange reportedly may designate the company as unfaithful disclosure corporation, potentially leading to its removal from KOSPI 200

    • -12.8% 2593.JP (ITO EN): reports 9M earnings; operating income falls (18%) year-on-year

    • -6.9% 3382.JP (Seven & i): reportedly to reject revised offer from Couche-Tard

    • -4.4% 3383.HK (Agile Group Holdings): reports February aggregated pre-sales value CNY0.85B; StreetAccount notes the year-ago figure was CNY1.54B

    • -4.3% 002594.CH (BYD Co.): confirms HK$43.51B placement at HK$335.2/share

    • -2.0% 2330.TT (Taiwan Semiconductor): intends to expand its investment in advanced semiconductor manufacturing in the US by an additional $100B

• Data:

  • Economic:

    • Japan

      • Q4 MOF corporate survey capex (0.2%) y/y vs consensus +5.0% and +8.1% in prior quarter

        • Ex-software capex +3.1% y/y vs consensus +4.7% and +9.5% in prior quarter

      • January unemployment rate 2.5% vs consensus 2.4% and revised 2.5% in prior month

        • Job offers to applicants ratio 1.26 vs consensus 1.25 vs 1.25 in prior month

    • Australia

      • January retail sales +0.3% m/m vs consensus +0.3% and (0.1%) in December

      • Q4 current account balance (A$12.5B) vs consensus (A$12.0B) and revised (A$13.9B) in Q3

        • Net exports to contribute +0.2 ppt to Q4 GDP vs +0.1 ppt addition to Q3 GDP

        • Public demand to contribute +0.2 ppt to Q4 GDP

    • South Korea January

      • Industrial production (2.3%) m/m vs FactSet consensus (1.8%) and revised +3.9% in prior month

        • Industrial production (4.1%) y/y vs FactSet consensus (3.4%) and revised +4.4% in prior month

  • Markets:

    • Nikkei: (454.29) or (1.20%) to 37331.18

    • Hang Seng: (64.50) or (0.28%) to 22941.77

    • Shanghai Composite: 7.28 or +0.22% to 3324.21

    • Shenzhen Composite: 13.83 or +0.68% to 2045.80

    • ASX200: (47.60) or (0.58%) to 8198.10

    • KOSPI: (3.86) or (0.15%) to 2528.92

    • SENSEX: (162.64) or (0.22%) to 72923.30

  • Currencies:

    • $-¥: (0.48) or (0.32%) to 149.0210

    • $-KRW: +1.18 or +0.08% to 1460.1200

    • A$-$: (0.00) or (0.44%) to 0.6199

    • $-INR: +0.01 or +0.02% to 87.3797

    • $-CNY: (0.00) or (0.04%) to 7.2825