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StreetAccount Summary - Asian Market Recap: Nikkei +0.46%, Hang Seng (2.35%), Shanghai Composite (0.00%) as of 04:10 ET

Mar 25 ,2025

• Synopsis:

  • Asian equities mixed Tuesday. Hang Seng led China market declines with sell-off in tech stocks deepened. Taiwan and Japan closed higher. ASX flat. Korea was lower. India trading flat after six straight sessions of gains, Indonesia rebounded. US futures edging down. Treasury yields little changed while JGB and Aussie curves bear steepened. Dollar stronger against most Asian currencies. Crude higher while gold flat. Bitcoin pulling back following Monday's rally.

  • President Trump called 2-April tariff announcements "Liberation Day" meanwhile indicated not all of his threatened levies would be imposed next Wednesday and some countries may get breaks. Added US would impose sector-specific tariff announcements in "very near future", targeting areas like autos, lumber, pharma and chips. Trump's announcement of secondary tariffs on countries purchasing oil from Venezuela also seen as an extension of his sanctions toolkit after recently targeting a China refiner buying Iranian crude.

  • Hang Seng Tech pullback continues with index down more than 9% from last Tuesday high amid lack of fresh momentum. Meanwhile Xiaomi's (1810.HK) $5.5B share sale at a discount and Alibaba's (9988.HK) chairman warning of buble forming in data center construction have further hit sentiments. Momentum increasingly harder to maintain as tech index valuation nears three-year average. China mulling extending subsidy scheme to services industries such as travel, tourism and sports bid to further boost consumption. China's government expenditure rose 2.9% y/y in first two months, posting weakest start since 2022, underlining thoughts government saving fiscal firepower to counter future headwinds from tariffs. PBOC unveiled new method for pricing one-year loans, phasing out MLF rate as main policy rate. Elsewhere, minutes from January BOJ meeting showed some divergence in policy guidance during that month's rate hike. Bank Indonesia intervened in FX market to defend rupiah as currency fell to 27-year low.

  • BYD (1211.HK) earnings topped forecasts. Particular attention was on market share gains with Jan-Feb sales run-rate tracking ahead of FY guidance. HSBC (5.HK) plans to double down on investment banking in Asia and Middle East after exiting key businesses in Europe and US, according to CEO Elhedery. Hyundai Motor (005380.KS) shares jumped after announcing additional $21B investment in US-based car manufacturing and supply chains for critical materials. Move hailed by Trump as success that tariffs work. Samsung Electronics's (005930.KS) vice chairman and co-CEO Han Jong-hee has died of sudden cardiac arrest.

• Digest:

  • Hong Kong tech rally stalls:

    • Hang Seng tech pullback continues with sector down ~9% from mid-March highs following an AI-driven bull run over past two months. Alibaba (9988.HK) chairman warned bubble forming in data center construction, which follows similar concerns expressed by TD Cowen late February about Microsoft (MSFT) scrapping leases for US data centers. Sunny Optical (2382.HK) also warned of capacity glut while analyst cited liquidity concerns from Xiaomi's (1810.HK) upsized share sale (Bloomberg). While sentiment towards Hong Kong tech stocks has turned bullish amid the sharp run higher, BofA noted China tech stocks' forward P/E discount to US 'Mag 7' has narrowed to ~30% from above 120% in January. Thoughts Mag 7 could regain leadership position with collective valuation at two-year low, while Hang Seng Tech valuation near three-hear average. Meanwhile, Daiwa highlighted technical roadblocks for Hang Seng with 24K level as potential resistance, putting index at risk of pulling back to ~22K. Lopsided nature of Hong Kong rally underscored by Hang Seng Tech index outperforming consumption index by most since mid-2020.

  • Xiaomi confirms upsized share sale, adding to boons for Hong Kong market:

    • Xiaomi (1810.HK) announced an 800M share sale at HK$53.25 per share, confirming an earlier Bloomberg report. Translates to a total capital raise of $5.5B, up from initial plans for 750M shares. Company said proceeds to be primarily used for business expansion and R&D to further advance technological capabilities. Bloomberg sources said the offering was multiple times subscribed with strong interest from long-only investors and sovereign wealth funds. Share sale comes on the heels of recent upward revision to 2025 EV delivery target and previously reported plans to expand the size of a second EV plant in Beijing. Cited Citigroup takeaway that fundraising can be a long-term positive, though near-term negative given dilution effects. Development comes in the context of a reinvigorated share market, following BYD's (1211.HK) $5.6B placement earlier this month against the backdrop of Hang Seng's 20% rally YTD. Xiaomi one of the best performers, more than tripling in value from its August trough. Bloomberg calculations put Hong Kong bourse on track for the largest quarterly share sale since 4Q21 with total equity deals including IPOs surging more than seven-fold to nearly $10B excluding the Xiaomi offering.

  • China mulling services subsidies to boost domestic demand:

    • FT sources indicated China considering addition of services to its subsidy program to stimulate consumption. A program designed to stimulate spending in areas such as travel, tourism and sports could be launched in H2 if consumption continues to lag behind expectations. No ballpark figure was mentioned, though for context, article recalled the consumer goods trade-in scheme saw funding doubled to CNY300B ($41B) this year. Story noted global business leaders at the China Development Forum expected to raise topic of China's heavy reliance on exports and investment rather than consumption and services to drive economic growth, echoing longstanding calls by economists. Cited ongoing concerns that the subsidy program is merely encouraging a front-loading in consumer demand rather than acting as a catalyst for sustainable growth. An academic noted that some local governments already launched similar subsidies for cultural and tourism activities though no such program is in place at the national level. Cautioned that decision-making was likely to be slow and introduction of any scheme would be gradual.

  • BOJ MPM minutes show divergence on rate guidance, underlying inflation disclosure still in discussion stage:

    • No surprises on rate hike decision out of the January MPM minutes. Key points were covered in the preceding Summary of Opinions and press reports. Some discussion of forward guidance, where one member urged for extreme caution against offering indications of the pace of rate hikes as well as the terminal rate. Another proposed the (currently adopted) meeting-to-meeting approach, to which, a different member suggested the policy rate should be around 1% in H2 of FY25 if economy and prices developed in line with the outlook (as conveyed in Tamura's speech in February). Following previous recognition that transparency would be enhanced by disclosing analysis of underlying inflation, minutes indicated discussions were still ongoing. Members shared the view that underlying CPI inflation could not be captured by a single indicator, requiring various perspectives and results interpreted with a degree of latitude. Debate veered into what might happen to underlying inflation rather than the topic of disclosure. Recall that Governor Ueda offered incremental information at his post-MPM press conference, noting that underlying inflation was still below 2% but above 1%. Compares to core guidance that policy adjustments will continue if underlying inflation is tracking toward 2%.

  • JGB 10-year yield of 2% eyed as next threshold with little domestic appetite:

    • Nikkei discussed JGB market dynamics as major domestic institutions remain sidelined amid the notable upswing in yields and BOJ's laissez-faire stance. With benchmark 10-year yield hitting a 16-year high 1.57% this month, MOF becoming nervous about fiscal implications and market participants said to be eyeing the 2% level cited in the ministry's FY25 budget calculations as the next key threshold. While BOJ sources noted monetary policy is not bound by MOF yield assumptions, markets still see it as an effective ceiling. While there is still some distance from current levels, article implied little else standing in the way of further extension. Underlining MOF concerns, recalled the assumed FY26 yield was 2.2%, translating to an estimated JPY12T ($79.6B) in debt servicing costs. MOF source warned that 3% would not be a surprise given the current trajectory. Ballooning latent JGB losses among regional banks also mentioned, totaling JPY1.96T as of 2024-end and a quarter of that logged in Q4 alone. Yields prompting shortening duration or switching to hold-to-maturity strategy. While BOJ Governor Ueda indicated they were ready to increase JGB purchases in response to abnormal moves, story cited a BOJ source expressing concerns that any response would constitute a return to YCC, and fixed-rate operations described as an emergency measure.

  • Notable Gainers:

    • +9% 3659.JP (NEXON Co.): to launch worldwide release of The First Berserker - Khazan on 28-Mar

    • +5.7% 1516.HK (Sunac Services Holdings): reports FY results with core net income attributable ahead of FactSet estimates

    • +3.3% 005380.KS (Hyundai Motor): Hyundai Motor Group confirms $21B Investment in the US

    • +1.1% D05.SP (DBS Group Holdings): reportedly open to bolt-on acquisitions

  • Notable Decliners:

    • -10.9% 7071.JP (Amvis Holdings): hospice homes reportedly suspected of fraud

    • -10.1% 2382.HK (Sunny Optical Technology (Group)): reports FY results with revenue below FactSet estimates

    • -9.6% 285.HK (BYD Electronic (International)): reports FY results with net income attributable below FactSet estimates

    • -8.3% 270.HK (Guangdong Investment): reports FY results with revenue and net income attributable below FactSet estimates

    • -3.8% 914.HK (Anhui Conch Cement): reports FY earnings with CAS net income attributable and revenue below FactSet estimates

    • -2.2% 2020.HK (ANTA Sports Products): speculation of potential acquisition of Jack Wolfskin

    • -1.4% 3382.JP (Seven & i): issues provides additional information on misunderstandings regarding discussions between company and Alimentation Couche-Tard

• Data:

  • Markets:

    • Nikkei: 172.05 or +0.46% to 37780.54

    • Hang Seng: (561.31) or (2.35%) to 23344.25

    • Shanghai Composite: (0.05) or (0.00%) to 3369.98

    • Shenzhen Composite: (11.64) or (0.57%) to 2038.17

    • ASX200: 5.60 or +0.07% to 7942.50

    • KOSPI: (16.26) or (0.62%) to 2615.81

    • SENSEX: 33.33 or +0.04% to 78017.71

  • Currencies:

    • $-¥: (0.03) or (0.02%) to 150.6730

    • $-KRW: +1.38 or +0.09% to 1468.8100

    • A$-$: (0.00) or (0.08%) to 0.6281

    • $-INR: +0.23 or +0.27% to 85.7601

    • $-CNY: +0.01 or +0.12% to 7.2620