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StreetAccount Summary - Asian Market Recap: Nikkei (0.20%), Hang Seng (2.19%), Shanghai Composite (1.29%) as of 04:10 ET

Mar 21 ,2025

• Synopsis:

  • Asian equities ended mixed Friday to end a volatile week for the region. There were gains for Australia, South Korea and India as well as Japan's Topix index, which closed at an eight-month high, but the Nikkei 225 fell and Greater China was led lower by a sharp correction in Hong Kong. Taiwan also saw losses while Indonesia saw renewed weakness. US futures lower, Europe lower in early trades. US dollar at two-week high but off peaks, yen weaker. Treasury yields higher across tenors, JGBs mixed. Crude oil higher again. Precious metals down, copper continues to hover at near one-year high.

  • Asia markets rather directionless as investors wait for the next big catalyst. Hong Kong listed stocks showed evidence of more profit taking for a second day to end at its week-long low while India benchmarks a notable bright spot as it approaches six-week highs. Japan's boards continued to polarize as the Topix's bank stocks gained but the Nikkei's trading houses and tech-leaning stocks struggled. Few catalysts to change the overarching market narrative for the meantime with investors on edge over pending US tariffs due on 2-Apr; geopolitical tensions in Europe and the Middle East unresolved, and long-term question over China's economic recovery remaining unanswered.

  • For today, in macro developments, Japan core inflation fell by less than expected to 3.0% while ex-energy inflation was in-line at 2.6% as energy subsidies restarted. South Korea exports recovered in the first 20 days of March following February's drop; South Koreas PPI inflation slowed amid softer manufacturing and services prices. Malaysia inflation reached a 13-month low. Thailand posted its largest trade surplus in 18 months as imports eased considerably.

  • Hyundai Motor (005380.KS) and GM are in talks over sharing EV pickup trucks and van models in the US. Hon Hai (2317.TT) is set to produce EVs for on behalf of Mitsubishi Motors (7211.JP). IndusInd Bank (532187.IN) has appointed an independent firm to investigate accounting discrepancies that it discovered during an internal audit. Hindalco Industries (500440.IN) is to invest $5.2B in its aluminum, copper and specialized alumina business units.

• Digest:

  • Japan core inflation slightly above expectations:

    • Core CPI rose 3.0% y/y in February, compared to consensus 2.9%. Follows 3.2% in the prior month and returns to the December pace. Ex-fresh food & energy inflation was in line at 2.6% following prior 2.5%. Recent attention on overall inflation, easing to 3.7% from a two-year high 4.0% and more notably above consensus 3.5%. Results were mostly consistent with preceding Tokyo figures. Energy contributions eased by 0.30 ppt as electricity & gas subsidies were reinstated. But this was somewhat offset by ongoing acceleration in non-fresh food prices. Rice surged 81.4% and this alone contributed 0.30 ppt to the headline. Fresh fruit and vegetables (cabbage spiked 130.5%) added another 0.76 ppt combined. Broader goods inflation slowed to 5.7% from 6.3%, while services inflation edged down to 1.3% from 1.4%. Latest BOJ policy statement and comments by Governor Ueda remained sanguine on the outlook. Still expects external import cost-push impacts giving way to positive domestic factors guiding underlying inflation to the 2% in the second half of the projection period. Specific mention of rice prices and dissipation of energy subsidies to push up inflation in FY25.

  • Hon Hai to produce EVs for Mitsubishi:

    • Multiple press sources indicated plans for Hon Hai Precision Industry (2317.TT) to manufacture EVs for Mitsubishi (7211.JP) in a deal set to be announced in coming weeks (Nikkei, FT, Kyodo). Mitsubishi to sell EVs under its own brand amid aims to penetrate Oceania and other export markets. Mitsubishi statement denied they leaked the information though confirmed they are seeking cooperation with a variety of partners. No immediate implication for Honda (7267.JP) and Nissan (7201.JP) after merger talks that included Mitsubishi failed, though attention turns to how they will respond. Some suggestion this deal could provide Hon Hai with another path to an alliance with Nissan, though outlooked blurred by recent Nissan management changes to implement crucial restructuring. Hon Hai has been considering a four-way collaboration with all parties and seen as the main winner for now, achieving a break-through into the auto industry enabling diversification away from low-margin iPhone assembly. Mitsubishi has lagged behind EV development, though analysts noted its comparative advantage in hybrid technology.

  • Japan rice demand inelasticity keeps inflation pressures entrenched:

    • Nikkei discussion highlighted household purchases of rice volumes have been growing despite the record surge in prices which have doubled since June. This is driving up broader food prices, which contributed over half the 4% rise in January overall CPI. Rice prices notably continued to rise in the autumn when new harvest enters the market. Some thoughts that households were stockpiling rice during the summer shortage, though volumes have continued to increase by double digits on the year while a recent Japan Finance Corp survey showed 64.7% of respondents had not changed purchase volumes since the fall. Pertinent to inflation expectations were survey perceptions indicating just 11.3% saw price gains as unacceptable, 46.1% acquiescing and 28.1% saw trend as justified. Follows government release of rice reserves to alleviate price pressures. Farm ministry said first tranche of auctions held in the first week of March met targets, though will take some time to permeate as supplies are expected to reach stores at month-end at the earliest. Comments from BOJ Governor Ueda's press conference indicated he largely sees rice prices as a special factor, though cognizant of sustained increases eventually influencing inflation expectations.

  • Tariffs cloud central bank policy outlook:

    • Trump's tariff war heightening uncertainty for global central banks balancing growth headwinds against upside inflation risks (Reuters, Bloomberg). This week Fed downgraded its growth outlook while raising CPI estimates with Chair Powell favoring wait-and-see approach before adjusting policy. BOC Governor Macklem said inflation risks from tariffs limit ability to support growth by cutting rates. Across Europe, ECB President Lagarde said central bank's analysis suggested tariffs to have drag effect on GDP while lifting inflation. BOE noted ramp in trade uncertainty with unclear implications for inflation, Riksbank signaled rate cut pause amid significantly higher global uncertainties. SNB cut rates while also flagging pause with global developments representing the main risk. In Asia, BOJ Governor Ueda noted uncertainties had increased since January, making it more difficult to assess economic impact. However, also thoughts that a weakening dollar may provide scope for emerging markets to ease with futures pricing in increased likelihood of rate cuts at some Asian central banks (Bloomberg).

  • Dollar headwinds mount, but some strategists see rebound ahead:

    • Dollar weakness symbolic of waning US exceptionalism trade with DXY recently hitting Oct-2024 lows. JP Morgan turned bearish on dollar for first time in four years, forecasting further 1-3% downside for DXY by end-2025 amid trade policy uncertainty, expected US growth drag from tariffs and Europe's defense and infrastructure pivot. Referencing 'dollar smile' concept, dollar's reaction function has evolved to one where doubts about US economic resilience are mounting while rest of the word proving more resilient. Repatriation flows another downside factor with US equity allocations as a proportion of global ETFs having retreated alongside dollar over recent weeks. Underlining magnitude of that risk, Deutsch Bank noted foreign ownership of US equities stands at $16T or 23%. Still, bearish dollar views are not uniform with Standard Chartered predicting dollar rebound in Q2. Cited potential support from a more benign US economic slowdown than market is expecting, weaker tariff rollout, progression on tax cuts, and downside risks to European growth from reciprocal tariff implementation.

  • Notable Gainers:

    • +10.3% 6923.JP (Stanley Electric): City Index Eleventh reveals 5.1% stake

    • +4.2% 1179.HK (H World Group): reports Q4 results with revenue ahead of FactSet estimates

    • +4.0% 780.HK (Tongcheng Travel Holdings): reports Q4 adjusted net income CNY660.2M vs StreetAccount CNY615.6M

  • Notable Decliners:

    • -30.0% 028300.KS (HLB Co.): receives CRL from FDA for rivoceranib plus camrelizumab for treatment of unresectable hepatocellular carcinoma; FDA will not approve rivoceranib until regulatory approval action is issued for SHR-1210

    • -13.0% 012450.KS (HANWHA AEROSPACE): to issue 6.0M shares; pricing is expected to be KRW605K/share

    • -12.8% 1958.HK (BAIC Motor): guides FY net income attributable CNY950M vs FactSet CNY3.31B

    • -5.8% 1113.HK (CK Asset Holdings): reports FY results with revenue HK$45.53B vs StreetAccount HK$45.84B

    • -3.7% 1.HK (CK Hutchison Holdings): reports FY net income attributable HK$20.77B vs FactSet HK$22.30B

    • -0.3% 7211.JP (Mitsubishi Motors): Hon Hai Precision Industry reportedly to produce EVs for Mitsubishi Motors

• Data:

  • Economic:

    • Japan February

      • Nationwide core CPI +3.0% y/y vs consensus +2.9% and +3.2% in prior month

        • CPI excl. fresh food & energy +2.6% y/y vs consensus +2.6% and +2.5% in prior month

        • Overall CPI +3.7% y/y vs consensus +3.5% and +4.0% in prior month

    • New Zealand February

      • Trade balance NZ$510M vs revised (NZ$544M) in January

        • Exports +16% y/y vs +1.4% in January

        • Imports +2.1% y/y vs +13% in January

  • Markets:

    • Nikkei: (74.82) or (0.20%) to 37677.06

    • Hang Seng: (530.23) or (2.19%) to 23689.72

    • Shanghai Composite: (44.12) or (1.29%) to 3364.83

    • Shenzhen Composite: (38.03) or (1.81%) to 2063.51

    • ASX200: 12.30 or +0.16% to 7931.20

    • KOSPI: 6.03 or +0.23% to 2643.13

    • SENSEX: 613.94 or +0.80% to 76962.00

  • Currencies:

    • $-¥: +0.63 or +0.42% to 149.4110

    • $-KRW: (5.33) or (0.36%) to 1461.6800

    • A$-$: (0.00) or (0.13%) to 0.6294

    • $-INR: (0.28) or (0.32%) to 86.0455

    • $-CNY: (0.00) or (0.02%) to 7.2471