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StreetAccount Summary - Asian Market Recap: Nikkei +0.07%, Hang Seng (0.76%), Shanghai Composite (0.23%) as of 04:10 ET

Mar 12 ,2025

• Synopsis:

  • Asia equities ended mixed Wednesday. Some solid gains in South Korea, Taiwan and Japan as chip and battery-related stocks rallied. Greater China benchmarks fell but were off their lows by the close. Heavy losses on ASX after Trump imposed tariffs on Australian steel imports. India lower, Southeast Asia mixed. US futures point to a higher open, Europe higher at the open. US dollar lower but off troughs, yen stronger after Ueda comments. Treasury yields higher at the short end, lower at the long; CGB yields higher for fourth consecutive day with 10Y yield nearing 2%. Crude oil prices edging higher, precious metals flat, industrial metals gaining. Cryptocurrencies volatile and trending downward.

  • Volatility remaining elevated overnight and into Wednesday's Asia trading day. Trump disappointed Australian investors by imposing a 25% tariff on Australia-made steel and aluminum products despite an extensive lobbying campaign by Canberra. Tariffs came into effect as planned with Australia refraining from imposing retaliatory measures but the EU said its countermeasures would target up to €26B of US goods. A minor breakthrough in Canada-US trade relations after Canada was threatened with 50% metal tariffs after Ontario said it would introduce a 25% surcharge on electricity exports to the US, but both sides backed down at the final moment.

  • In other news, South Korea unemployment rate fell but employment in construction dropped notably; household debt also picked up notably in February. Japan wholesale inflation reached 4.0% but was in line with forecasts. BOJ Governor Ueda said he sees no abnormalities in higher JGB yields but admitted the bank would intervene if there was a sudden spike in yields.

  • Toyota Motors (7203.JP) is considers exporting auto to the US from the UK to ease the impact of tariffs. Bharti Airtel (532454.IN) and Starlink announced a deal to bring starlink internet services to India. Renault said it was confident new Nissan Motors (7201.JP) CEO Espinosa would be keen to continue the relationship between the two firms. Cathay Pacific (0293.HK) posted a marginal growth in full-year profits but said airfares had fallen on intense competition in Asia. TSMC (2330.TT) is eying Nvidia, AMD and Broadcom as partners for an Intel foundry joint venture, according to press reports. Rio Tinto (RIO.AU) is to raise up to $9B in a bond issuance to pay for the buyout of Arcadium Lithium.

• Digest:

  • BOJ Governor Ueda sees no abnormalities in JGB yields, consensus looks for higher terminal rate:

    • Bloomberg reported parliamentary discussions with BOJ Governor Ueda included comments that he essentially sees the uptrend in JGB yields as a justifiable and added, "there is no major gap between our views and the market's." Saw momentum as a "natural" reflection of rate expectations. Recall Ueda's previous response to questions on the matter reaffirmed BOJ could increase JGB purchases in response to abnormal moves, which provided some short-term support for the market. Separately, latest Bloomberg consensus poll (n=52) found July remained the most popular forecast for the next rate hike, albeit retreating to 48% from 56%. Revisions were spread out between June and April/May though remain a small minority. Half the respondents picked May as the earliest possible timing. Expected pace of hikes remained unchanged with 76% still looking for semi-annual moves. However, main development came in an upward revision to the terminal rate to 1.25% from 1.00%. Accompanying anecdotes were mixed. Inflation, wages and yen weakness cited as factors that could prompt an early move, though three-quarters of forecasters suggested tariff headwinds could be strong enough to delay the normalization path. Nikkei QUICK poll with a domestic sample (n=28) showed majority (18) looking for a July move. Narrow majority (10) still saw a terminal rate of 1.00%, though most of the rest projecting 1.25% or 1.50%.

  • President Trump rules out exemption for tariffs on Australia steel and aluminum:

    • US to impose 25 % tariff on Australia-made steel and aluminum products from Wednesday after President Trump rejected Canberra's request for exemption. White House said Trump "considered it, and considered against it", adding if Australia steel manufacturers want to be exempted, they should consider moving steel manufacturing to US (AFR). Australia defense minister Marles said decision was disappointing as "tariffs don't make any sense". Decision comes after extensive lobbying campaign by PM Albanese government including direct conversation between Trump and Albanese. PM said Wednesday, White House decision "not a friendly act". Decision weighed on Australia stocks that gapped lower at the open but rallied after Albanese said Australia will pursue negotiations, and not impose retaliatory measures. ASX currently underperforming Asia region, briefly touched technical correction - 10% below record high - shortly after open although is now off low; industrials and mining sectors underperforming broader benchmark.

  • China bond yields surge with 10Y nearing pivotal 2.0%:

    • China's 10Y sovereign bond yield rose again Wednesday to near 2.0% as debt selloff continued on supply pressures, China equity market surge, Beijing's reluctance to ease monetary policy further. CGB 120Y and 30Y yields already surpassed 2.0% level for first time since mid-Nov in past few days. Investors lowered expectations for PBOC easing monetary policy after Governor Pan reiterated several times further easing measures would "come at appropriate time" but has failed to follow through. Glut of bond supply has also pressed on prices with promise of more to come with CNY1.3T in ultra-long bonds due this year. Bloomberg noted test for China's debt market coming this Friday when CNY167B ($23.1B) 2Y bonds sale due, largest ever offering of tenor in single auction. 10Y 2.0% yield seen as key resistance level as it represented floor for yields in late 2024 as pressure mounted on PBOC to ease against strong dollar.

  • Japan GPIF said to maintain equity allocations, disappointing expectations for a boost:

    • Nikkei reported GPIF has decided to maintain its equal weighting of 25% in domestic/foreign bonds and stocks. Fund reviews weightings once every five years. Follows speculation of a higher equity allocation after the health ministry proposed revising expected ROI to 1.9% above wage growth from 1.7%. Fund concluded there is less urgency to increase equity investments due to uncertainty over the outlook for the global economy and rates, particularly with bond yields on the rise. GPIF annual returns averaged 6.81% in the decade through FY23. Sources indicated the fund is confident in achieving the ROI target without allocation tweaks. Portfolio structure used as a benchmark by other major public pension funds which together told more than JPY300T ($2.0T) in assets under management as of FY24-end. Earlier article noted some concerns about a potential domestic equity allocation increase given the current 25% is well above Japan's 5% share of the global market. Welfare ministry indicated an increasingly conservative stance to ensure returns beat a rising bar from wage growth. Market commentaries indicated private fund managers were waiting for GPIF allocations ahead of their own FY-end rebalancing.

  • Japan MOF large manufacturer BSI turns negative, earnings devoted to capex, shareholder payouts, wages:

    • MOF BSI for large manufacturers was -2.4 in Q1 following 6.3 in the previous quarter. Main drags came from sharp downturns in food and chemicals sectors. Bright spots were autos and electric machinery. Large nonmanufacturer index also softened to 4.1 from 3.8 in Q4. Wholesalers swung into negative territory while utilities remained a drag. Corporate income statement dynamics were mixed. FY24 projections saw upward revisions to sales growth and current profits. Capex was downgraded somewhat though remains elevated. However, FY25 outlook pointed to notably slower growth in sales, stall in profits and further moderation in capex -- albeit subject to tweaks over the course of the year ahead in a similar fashion to the BOJ Tankan. Qualitative polling showed large firms mainly saw no significant deviation between actual investment activity versus projections. However, second ranked response cited variance from changing costs, affirming recent discussions of investment constraints with labor shortages being the other key factor. Small firms more sensitive to changes in economic environment. Survey also asked about deployment of retained earnings where strong majority of large manufacturers prioritized capex while nonmanufacturers chose shareholder payouts. Smaller firms focused on employee compensation as a function of their structurally higher labor share of profits.

  • Notable Gainers:

    • +4.4% 2076.HK (Kanzhun): reports Q4 adjusted EPADS ahead of FactSet estimates

    • +3.8% 2368.TT (Gold Circuit Electronics): reports FY earnings with revenue ahead of FactSet estimates

    • +1.1% 028050.KS (Samsung E&A Co.): to purchase 10% of newly issued Nel ASA shares through a direct placement; companies also sign EPC collaboration agreement

    • +0.6% 7201.JP (Nissan Motor): confirms appointment of Ivan Espinosa as new CEO/president effective 1-Apr, replacing Makoto Uchida

    • +0.3% 7203.JP (Toyota Motor): reportedly exploring ways to mitigate US tariffs including exporting vehicles from the UK to the US

  • Notable Decliners:

    • -10.8% 6966.JP (Mitsui High-tec): reports FY results with revenue below FactSet estimates

    • -9.7% 551.HK (Yue Yuen Industrial (Holdings)): reports FY earnings with revenue below FactSet estimates

    • -8.3% 2357.TT (ASUSTek Computer): reports FY earnings with EBIT below FactSet estimates

    • -8.1% 1883.HK (CITIC Telecom International Holdings): reports FY results with net income attributable HK$910M vs guidance HK$860-920M; revenue down (4%) year-on-year

    • -5.5% 2615.TT (Wan Hai Lines): reports FY EPS below FactSet estimates

    • -1.8% 293.HK (Cathay Pacific Airways): reports FY earnings with net income attributable and revenue ahead of StreetAccount estimates

• Data:

  • Economic:

    • Japan

      • February CGPI +4.0% y/y vs consensus +4.0% and +4.2% in prior month

      • Q1 MOF BSI large manufacturing index (2.4) vs 6.3 in prior quarter

        • Large non-manufacturing index 4.1 vs 5.4 in prior quarter

        • Large all-industry index 2.0 vs 5.7 in prior quarter

    • South Korea February

      • Unemployment rate 2.7% vs FactSet consensus 2.8% and 2.9% in prior month

  • Markets:

    • Nikkei: 25.98 or +0.07% to 36819.09

    • Hang Seng: (181.83) or (0.76%) to 23600.31

    • Shanghai Composite: (7.90) or (0.23%) to 3371.92

    • Shenzhen Composite: 2.66 or +0.13% to 2090.38

    • ASX200: (103.90) or (1.32%) to 7786.20

    • KOSPI: 37.22 or +1.47% to 2574.82

    • SENSEX: (149.86) or (0.20%) to 73952.46

  • Currencies:

    • $-¥: +0.67 or +0.45% to 148.4470

    • $-KRW: (0.38) or (0.03%) to 1451.3375

    • A$-$: (0.00) or (0.21%) to 0.6286

    • $-INR: +0.11 or +0.13% to 87.2419

    • $-CNY: +0.01 or +0.19% to 7.2428