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StreetAccount Summary - Asian Market Recap: Nikkei +0.23%, Hang Seng +2.84%, Shanghai Composite +0.53% as of 03:10 ET

Mar 05 ,2025

• Synopsis:

  • Asia equities ended mostly higher Wednesday with modest gains in most benchmarks. Biggest gains seen in Hong Kong with an across-the-board advance on NPC announcements; mainland boards also saw gains. South Korea and Taiwan up sharply as tech stocks recovered, Japan with modest gains alongside India and most of Southeast Asia. Australia the only major board to see losses. US futures higher but off peaks, Europe opened with strong gains. US dollar at its lowest since early November; AUD, NZD and won briefly weaker on fresh tariff comments from Trump before recovering as the dollar fell. Treasury yields higher across tenors. Crude prices down again, precious metals higher, base metals mixed. Cryptocurrencies mixed although bitcoin higher.

  • Asia markets saw a modest reprieve from the global selloff of the past few days after US Commerce Secretary Lutnick hinted at a tariff compromise for Canada and Mexico, and constructive news filtered out from China's NPC. However, several Asia currencies came under pressure for a time as Trump reiterated reciprocal tariffs could be implemented on 2-Apr, affecting the won, AUD and NZD in particular before they rallied. Hong Kong stocks positively affected by NPC announcements that included a FY GDP growth rate of 5%, a special treasury bond issuance to fund infrastructure spend, a downgrade to its annual inflation target to 2%, and a boost to military spending. Investors also welcomed a measured response to Trump's new 10% tariff on China-made goods, saying it opened the door to talks.

  • In other developments, BOJ Deputy Governor Uchida repeated rate normalization will continue if economic forecasts are met. China Caixin service PMI stronger than expected while India's final composite index was revised lower. Australian Q4 GDP growth rose in-line with expectations aided by consumption recovery. Singapore retail sales grew to an 11-month high. RBA Deputy Governor Hauser reiterated board doesn't share market's view on series of rate cuts. RBNZ Governor Orr announced his resignation on 31-Mar.

  • Country Garden (2007.HK) missed a self-imposed deadline to reach a deal on its debt restructuring plan. CK Hutchison (1.HK) is to sell its ports near the Panama Canal to BlackRock amid US pressure. Star Entertainment (SGR.AU) is close to collapse with cash set to run out on Friday, according to ABC; shares remained suspended. TSMC (2330.TT) said its most advanced chip technology will stay in Taiwan as it looks to invest $100B into the US. Coforge (532541.IN) signed a 13-year partnership with US travel bookings provider Sabre valued at around $1.56B.

• Digest:

  • China maintains 2025 GDP growth target at around 5%, reaffirms rate cut guidance:

    • Xinhua published key 2025 economic targets from the government work report as Premier Li delivered his NPC opening address. Consistent with prior leaks, GDP growth target was kept at around 5% with CPI inflation at around 2%. On fiscal policy, ultra-long special treasury bond issuance was set at CNY1.3T ($182B), up CNY300B from last year. Local government special bond issuance will be CNY4.4T, up CNY500B on the year. Added new government debt will total CNY11.86T, up CNY2.9T, enabling notably higher fiscal spending. Pledged to launch special initiatives to boost consumption, including CNY300B in funding from ultra-long special treasury bonds to support consumer goods trade-in programs. On monetary policy, reaffirmed earlier PBOC guidance for cuts to RRR and other rates when appropriate. Noted authorities will refine and develop new structural monetary policy instruments to provide stronger support for sound development of the real estate sector and the stock market. Specifically on the property market, authorities will introduce city-specific policies on adjusting or reducing property transaction restrictions in continued efforts to stem the downturn and restore stability. Elsewhere, signaled improved contingency plans for external shocks to safeguard financial security and stability. China will support and encourage private investment, guided towards major infrastructure and public wellbeing projects.

  • Commerce Secretary Lutnick flags tariff relief for Canada and Mexico:

    • In interview with Fox Business, Commerce Secretary Howard Lutnick flagged tariff relief for Canada and Mexico as soon as Wednesday (Bloomberg). Lutnick's remarks come after 25% tariffs on Canada and Mexico went into effect on 4-Mar. Noting his conversations with Canada and Mexico on Tuesday, Lutnick said he believes Trump will work out a longer-term compromise with those countries that goes beyond just another pause. Added tariffs on goods covered by USMCA will likely settle "somewhere in the middle" though he downplayed a full rollback. Lutnick's olive branch lent support to view of Trump's tariff threats as a negotiating tactic. Lutnick had also suggested on Sunday that Canada and Mexico tariff rate could be lower than the 25% originally planned, citing efforts being made by those two countries have in tightening security of their borders with US. Still, Trump unpredictability remains a factor after the president later said said there was no room left for compromise on tariffs, taking aim at what he believes are insufficient efforts by Canada and Mexico to stem flow of fentanyl into US.

  • BOJ Deputy Governor Uchida stays on the gradual normalization course:

    • In a speech, Deputy Governor Uchida echoed the core message that policy adjustments will continue if the outlook for economic activity and prices is realized. Noted that while core inflation has been above 2% for nearly three years, this still reflects cost-push factors while underlying inflation has yet to reach 2%. These two series are expected to converge to around 2% in the second half of the projection period as of the January Outlook Report, elaborating some time from H2 of FY25 to FY26. At that time, anticipates the policy rate to approach neutral though repeated BOJ disclaimers about neutral rate estimates being too imprecise to be practical, ranging from -1% to +0.5%. Notably, in a review of the January rate hike, indicated that while domestic dynamics were on track, timing was largely determined by stabilization in US economic conditions, drawing on lessons from the market volatility in the wake of the July hike. Other topics included a reaffirmation of its JGB purchase tapering strategy as outlined in the original plan that included potential responses to abnormal moves in yields through operations such as fixed rate ops and funds supplying against pooled collateral.

  • China's restrained response to Trump's tariffs seen leaving room for talks:

    • China retaliated against President Trump's tariffs with 10-15% levies on US agricultural and food products, though takeaways mostly saw it as a measured response. UBS noted China is largely self-sufficient in chicken, corn, wheat, and pork products and ING pointed out agricultural products accounted for only ~15% of US exports to China in 2024. While UBS noted US soybeans and sorghum accounted for 17.4% and 59.8% of Chinese consumption in 2024, JP Morgan cited USDA that showed China's 21Mt of US soybean and sorghum purchases for 2024/25 have largely been shipped. China added 10 US firms to its unreliable list and 15 others to its export control list, though their size, market cap and sales to China were not considered material (Bloomberg). Some thoughts that China's restrained response aimed at leaving room for negotiations with findings of US trade review ordered by Trump landing in early April. Press reports have previously highlighted China's willingness to explore trade and investment deals with Trump, which Trump himself has signalled openness to (NY Times).

  • China Caixin services PMI stronger than expected:

    • Caixin services PMI was 51.4 in February, above consensus 50.8 and prior month's 51.0, marking 26th consecutive month of services activity expansion. Higher activity supported by modest increase in new business volumes. Firms reported improvement in general market demand and more success in converting it into new contracts. Foreign sales rose with growth of new export business to three-month high. Employment rose fractionally following two months of falling staff levels while outstanding business down for second month. Input costs fell slightly, first time since Jun-2020 while output charges saw marginal decline too due to promotional activities amid intense competition. Business confidence rose to strongest since November with expectations of stronger demand and improving economic conditions. Caixin Composite PMI improved to 51.5, a three-month high and in expansion for 16th straight month, from January's 51.1, with improved supply and demand in both manufacturing and service sectors. Economists said stimulus policies on boosting domestic demand from March NPC will be closely watched amid growing external uncertainties.

  • Notable Gainers:

    • +21.9% 1.HK (CK Hutchison Holdings): to sell 80% of Hutchison Ports group to BlackRock-TiL Consortium for $14.21B (HK$110.45B)

    • +15.7% 2400.HK (XD Inc): guides FY net income CNY860-940M vs FactSet CNY633.1M

    • +9.1% 128940.KS (Hanmi Pharmaceutical Co.): owner family reportedly paid inheritance tax, reducing overhang concerns

    • +6.7% 6841.JP (Yokogawa Electric): to conduct up-to-¥20.00B buyback, to run between 3-Mar and 31-Dec

    • +2.8% 000270.KS (Kia Corp.): reports February global sales 253,850 units vs year-ago 242,917 units

    • +2.3% 005380.KS (Hyundai Motor): reports February global sales 322,339 units vs year-ago 315,593 units

    • +1.7% 9983.JP (FAST RETAILING): reports February Japan Uniqlo same stores + online net sales +12.2% y/y

  • Notable Decliners:

    • -3.7% 669.HK (Techtronic Industries): reports FY results with revenue below FactSet estimates

    • -1.0% 9843.JP (Nitori Holdings): reports February same-store sales (8.3%) y/y

    • -0.8% 880.HK (SJM Holdings): reports FY results with headline figures below FactSet estimates

• Data:

  • Economic:

    • South Korea Q4

      • Final GDP y/y +1.2% versus consensus +1.2% and +1.2% in prior quarter

    • China February

      • Caixin services PMI 51.4 vs consensus 50.8 and 51.0 in prior month

        • Caixin Composite PMI 51.5 vs 51.1 in prior month

    • Japan February

      • Final services PMI 53.7 vs preliminary 53.1 and 53.0 in prior month

        • Composite PMI 52.0 vs preliminary 51.6 and 51.1 in prior month

    • Australia Q4

      • GDP +0.6% q/q vs consensus +0.6% and +0.3% in Q3

        • GDP +1.3% y/y vs consensus +1.3% and +0.8% in Q3

    • Singapore January

      • Retail sales y/y +4.5% versus (2.9%) in prior month

    • India February

      • Final Services PMI 59.0 vs flash 61.1 and 56.5 in prior month

        • Composite PMI 58.8 vs flash 60.6 and 57.7 in prior month

  • Markets:

    • Nikkei: 87.06 or +0.23% to 37418.24

    • Hang Seng: 652.44 or +2.84% to 23594.21

    • Shanghai Composite: 17.75 or +0.53% to 3341.96

    • Shenzhen Composite: 8.35 or +0.41% to 2054.15

    • ASX200: (57.00) or (0.70%) to 8141.10

    • KOSPI: 29.21 or +1.16% to 2558.13

    • SENSEX: 811.33 or +1.11% to 73801.26

  • Currencies:

    • $-¥: (0.43) or (0.29%) to 149.3850

    • $-KRW: (4.07) or (0.28%) to 1449.2100

    • A$-$: (0.00) or (0.05%) to 0.6271

    • $-INR: (0.17) or (0.20%) to 87.0322

    • $-CNY: (0.01) or (0.11%) to 7.2574