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StreetAccount Summary - Asian Market Recap: Hang Seng (2.23%), Shanghai Composite (0.51%), Kospi +0.32% as of 04:10 ET

Mar 20 ,2025

• Synopsis:

  • Asian equities ended mixed Thursday. Hang Seng ended near its lows of the day while mainland China markets also fell. But elsewhere some solid gains, notably in Taiwan and Australia, with the region's other main boards also higher. Japan was closed for a holiday. US futures higher, Europe opened near the flatline. US dollar stronger, AUD and NZD weakening notably, the yuan also weakened again. Treasury yields mostly lower, JGB yields higher, CGB yields lower post PBOC liquidity injections this morning. Crude oil, precious and base metals all well bid. Cryptocurrencies off their highs.

  • Asia markets taking a cue from Wall Street's positive session overnight to build on recent gains except in Greater China where benchmarks dipped on profit taking and as its recent positive risk-reward tilt took a knock post the Fed's more upbeat-than-expected comments. Fed Chair Powell said in his briefing tariff-induced inflation was transitory with Fed Fund Futures penciling in at least two more rate cuts this year, with a third at a 50% chance. Tencent also weighed on the Hang Seng after pledging less-than-forecast investment into AI while South Korea's Kospi benefited from another leg up from POCSO and other steelmakers as well as a recovery in Samsung Electronics shares.

  • In macro developments, Australian employment unexpectedly contracted to end a run of strong prints that had formed RBA's assessment of a tight labor market. New Zealand Q4 GDP growth came in stronger than forecast though policy implications were limited. China left 1Y and 5Y LPRs unchanged as expected. Philippines central bank governor flagged a rate cut next month amid a modest tariff impact.

  • Hino Motors (7205.JP) has been fined $1.6B in penalties over a multi-year emissions fraud scheme in the US. Softbank (9984.JP) said it is to acquire Ampere Computing for $6.5B in cash with current stakeholders Carlyle and Oracle set to sell their shares. POSCO Holdings (005490.KS) is to sell its KRW 460B stake in Nippon Steel (5401.JP) and to launch a new department to deal with global trade issues. Tencent (700.HK) said it would boost capital expenditure significantly this year as it worked to strengthen its AI development and infrastructure.

• Digest:

  • China LPRs unchanged as expected:

    • Little attention on LPRs, which were unchanged at 3.10% in 1-year and 3.60% in 5-year, matching expectations. Benchmark rates held steady for the fifth straight month. Markets still widely anticipate rate cuts, reinforced by a recent dovish shift in policy stance to "moderately loose" though specific calls have dissipated as policy rhetoric has repeated guidance that easing would be implemented at the appropriate timing. This was seen consistent with earlier thoughts that policymakers are holding back on support until tariff impacts materialize. Recall state media reports last week reinforced the 'timing' angle, while also downplaying singular focus on rate cuts in favor of a more holistic approach to balance economic support and risk prevention. Also affirmed constraints from low banking sector NIMs and yuan depreciation. Markets continue to discuss the possibility of yuan devaluation to counter Trump tariffs. BoFA Asia FMS indicated growing expectations this would be a response from Bejing behind tit-for-tat retaliation and stronger stimulus. However, US President Trump has criticized currency weakness in China and Japan as a non-tariff barrier that would justify US reciprocal tariffs.

  • Australian monthly employment unexpectedly contracts:

    • Australian employment shrunk by 52.8K in February, surprising expectations for a 30.0K gain following January's 44.0K increase. Marked biggest monthly contraction since Dec-2023, which ABS attributed to fewer older employees returning to work last month. Full-time jobs fell 35.7K and part-time employment contracted 17.0K. Unemployment rate held at in-line 4.1%, though driven by unexpectedly sharp fall in participation rate to 66.8% from 67.3%. Monthly hours worked fell by 0.4% from record high in February, first such drop since May-2024. Weak February jobs figures snaps run of stronger-than-expected prints that prompted RBA in February to assess labor market conditions as tighter than previously thought. RBA's observation of a tight labor market a factor that underpinned its caution about prospects of further easing following February's rate cut. Initial market takeaways leaning dovish with swaps pricing in ~77% chance of a May rate cut vs 50% prior (Bloomberg). Economists also sticking with expectation for May cut when RBA will have received Q1 CPI and March's jobs data.

  • SoftBank to acquire Ampere to bolster AI ambitions:

    • SoftBank (9984.JP) announced it will acquire Ampere Computing for $6.5B in cash. Deal expected to close in 2H25. Leading stake holders Carlyle (CG) and Oracle (ORCL) will sell their shares. Ampere will operate as a wholly owned subsidiary and retain its name and headquarters in Santa Clara. SoftBank said the acquisition will help enhance capabilities in key areas and accelerate growth initiatives as the group broadens AI infrastructure investments in key ventures such as Cristal Intelligence and Stargate. Nikkei added that Ampere's strengths in large-scale data processing and AI will complement Arm's design capabilities to develop chips for data center equipment, which will be sold to tech companies and foundries. Reuters discussed potential synergies after Arm and Ampere had competed for major clients such as Microsoft (MSFT) and Google (GOOGL). Bloomberg noted Arm is looking to move from being a provider of a layer of technology to a seller of more lucrative complete solutions while Ampere will gain access to resources and possibly a larger customer base that will offer economies of scale.

  • Street Takeaways: March BOJ meeting

    • Baseline rate hike scenarios were unchanged after the BOJ meeting and Governor Ueda's press conference with forecasts still concentrated around June/July. Economists noted BOJ economic assessment was little changed and commentary was generally balanced on net. Acknowledged elevated tariff risk was the main new development, though this was not a surprise, and jury remains out until BOJ attains more clarity. Ueda mentioned they would have more to go on in the April Outlook Report, prompting some speculation this could set up conditions for an earlier hike. Meanwhile, domestic inflation pressures stand to be enhanced by strong wage hikes though requiring reconciliation with ongoing lag in the official monthly wage data. No immediate implications from surging rice prices until sustained elevation affects inflation expectations, consistent with Ueda's rhetoric. Hence, risks around the June/July scenario remain two-sided -- domestic factors could bring forward the next rate hike while tariff headwinds may warrant a later move. Yen levels and political instability around the summer upper house election also mentioned as swing factors. Economists remained comfortable with the semi-annual rate hike trajectory with no discussion of a higher terminal rate. Some attention on JGB purchase operations though Ueda offered no indications that a change in the roadmap would be necessary.

  • Hang Seng premium over mainland China near widest since 2020:

    • China's market rally over 2025 has widened Hong Kong's divergence from mainland indexes, with Hang Seng up 29% from mid-Jan lows compared to CSI 300's 4.5% gain. As a result, Hang Seng AH Premium index has fallen 10% over that time, near lowest since Jun-2020 (Bloomberg). UBS attributed the divergence to DeepSeek momentum fueling rise of Hong Kong's tech platforms, while China's weak economy and tepid onshore inflows have tempered sentiment towards A-shares. Conversely, onshore ownership of H-shares has risen sharply with HK$153B of net inflows in February, second-largest monthly total on record (Bloomberg). UBS noted southbound ownership of H-shares now similar to foreign active funds'11.2%. A-shares have historically commanded higher premiums in periods involving more positive investor views on China's economy, which is being spun as a potential catalyst for a AH premium recovery if Beijing's efforts in boosting consumption fuel a sustained economic recovery.

  • Notable Gainers:

    • +10% 601799.CH (Changzhou Xingyu Automotive Lighting Systems): reports FY results with revenue ahead of FactSet estimates

    • +7.9% 13.HK (Hutchmed): reports FY results; to present updated data from Savolitinib SAVANNAH Phase II at European Lung Cancer Congress 2025

    • +5.5% 006400.KS (Samsung SDI): CEO Choi Joo-sun discloses purchase of 1K shares

    • +4.0% 1316.HK (Nexteer Automotive Group): reports FY results with revenue ahead of FactSet estimates

  • Notable Decliners:

    • -16.2% 009420.KS (HANALL BIOPHARMA): Roivant announces results for Batoclimab MG/CIDP studies

    • -5.7% 1038.HK (CK Infrastructure Holdings): reports FY results with net income attributable below FactSet estimates

    • -5.5% 3888.HK (Kingsoft): reports FY results with net income attributable below StreetAccount estimates

    • -5.0% 2318.HK (Ping An Insurance (Group) Co. of China): reports FY results with net income attributable below StreetAccount estimates

• Data:

  • Economic:

    • Australia

      • February employment (52.8K) m/m vs consensus +30.0K and +44.0K in January

        • Unemployment rate 4.1% vs consensus 4.1% and 4.1% in January

        • Participation rate 66.8% vs consensus 67.3% and 67.3% in January

    • New Zealand

      • Q4 GDP +0.7% q/q vs consensus +0.4% and (1.0%) in Q3

        • GDP (1.1%) y/y vs consensus (1.4%) and (1.5%) in Q3

  • Markets:

    • Nikkei: Closed

    • Hang Seng: (551.19) or (2.23%) to 24219.95

    • Shanghai Composite: (17.48) or (0.51%) to 3408.95

    • Shenzhen Composite: (12.59) or (0.60%) to 2101.54

    • ASX200: 90.60 or +1.16% to 7918.90

    • KOSPI: 8.48 or +0.32% to 2637.10

    • SENSEX: 839.55 or +1.11% to 76288.59

  • Currencies:

    • $-¥: (0.16) or (0.11%) to 148.5250

    • $-KRW: +3.23 or +0.22% to 1461.5200

    • A$-$: (0.00) or (0.58%) to 0.6320

    • $-INR: +0.03 or +0.03% to 86.3231

    • $-CNY: +0.01 or +0.10% to 7.2377