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StreetAccount Summary - Asian Market Recap: Nikkei (0.60%), Hang Seng +0.41%, Shanghai Composite +0.15% as of 04:10 ET

Mar 27 ,2025

• Synopsis:

  • Asia equities ended mixed Thursday. Small gains for Greater China markets but the main boards finished well off their peaks. Singapore and India also higher but elsewhere, benchmarks fell with steep losses in South Korea and Taiwan. Japan's Nikkei and Australia's ASX also closed slightly lower. US futures mixed, Europe opened steeply down following Trump's latest tariff threat. US dollar flat, small gains for AUD and yen early on but since pared. Treasury yields higher across tenors, JGB yields lower. Crude oil futures lower, precious metals regaining momentum, copper off highs while iron ore up.

  • News overnight President Trump is to impose a 25% tariff on all imported autos from 2-Apr weighed on the region's automakers with some steep losses at Honda, Mazda, Nissan, Hyundai, Kia and Tata Motors. A sharp selloff on the Nasdaq Wednesday also weighed on tech shares, the combination of which led to some heavy losses in Japan and South Korea, with India's auto losses offset by advances in financials. Late on, Trump further threatened Europe and Canada with extra tariffs if they work together to offset US tariffs, adding to the negative market sentiment. China markets outperformed as analysts speculated auto tariffs and potential TikTok deal could take the heat off China tariffs.

  • Auto tariffs effectively ending chances of a BOJ rate hike in May as the bank will likely want longer to assess the economic impact with some analysts saying they could trim 0.1-0.2% from Japan's annual GDP growth. Minutes from January's BOJ meeting showed members discussed the pace of rate hikes if the economic and inflation outlooks were realized but auto tariffs now likely to give reason for bank to pause. Elsewhere, China industrial profits shrank in the first two months of 2025 as producer deflation persisted and firms faced cost pressures. Bloomberg sources noted China told state-owned banks to accelerate disposable of soured property loans in bid to free up financing for other parts of economy. India stocks supported on news authorities are considering raising the maximum foreign ownership rule to 10% for any individual stock.

  • Private equity group KKR reportedly near a final deal to acquire Topcon (7732.JP). China has told state-owned firms to hold off on any new collaboration with Li Ka-shing or his businesses, including CK Hutchison (1.HK). SEBI is investigating possible insider trading by five senior officials at IndusInd Bank (532187.IN), and whether the bank violated its disclosure norms.

• Digest:

  • Trump announces 25% tariffs on autos not produced in US:

    • On Wednesday evening, President Trump signed an executive order imposing permanent tariffs on autos not produced in US (Bloomberg, Reuters, FT). Auto tariffs will take effect on 2-Apr with duties to be collected from 3-Apr. Trump said initial tariff rate will begin at 2.5% before increasing to 25%, with no exceptions. Tariffs won't apply to auto parts made in US. White House Staff Secretary Will Scharf estimated auto tariffs will bring in $100B in annual revenue. Trump added that reciprocal tariffs on 2-Apr will apply to every country, but that they will be very lenient and in many cases tariff rate will be lower than what US is being charged (Bloomberg). This fits with recent press reports noting reciprocal tariffs would be more targeted than initially planned. Trump also repeated lumber and pharmaceutical products will be subject to tariffs. Note Bloomberg had also reported this week that White House could impose tariffs on copper imports within weeks. Trump spoke briefly on TikTok, repeating hopes to reach an agreement with China and floated possibility of giving China a tariff cut in return for Beijing's support (Bloomberg).

  • Trump's TikTok proposal, global auto tariffs point to flexibility on China tariffs:

    • Greater China's stock markets relatively outperformed Asia region Thursday as auto names weighed on South Korea, Japan and on a handful of individual names in India and Thailand while Shanghai and Hong Kong edged higher. Market watchers noted China auto's limited exposure to US markets with BYD (1211.HK) higher again in Hong Kong Thursday. Analysts noted modest market outperformance comes just as President Trump hinted he would consider lowering China tariffs in return for Beijing's support of US TikTok sale, indicating deal is priority for White House (Reuters, Bloomberg). Trump hinted deal could be in place early next week, just after 2-Apr date for auto and reciprocal tariffs to begin, but could extend 5-Apr deadline if details not finalized. Other analysts said auto/reciprocal tariffs show Trump showing more aggression toward other markets instead of focusing all efforts on China (Reuters).

  • Trump's tariff announcement weighs on Asian autos:

    • President Trump's auto tariff announcement generating negative reaction across Asia on Thursday with Japan and South Korean autos coming under some pressure (Nikkei). Japan autos comprised around a third of total exports to US in 2024 and with sector accounting for almost 3% of GDP, some estimates tariffs will shave 0.1-0.2% from Japan's growth (Bloomberg). At a company level, UBS noted percentage of Japan autos exported to US ranged from 10-30% and Goldman Sachs estimated 6% hit to Toyota's (7203.JP) FY operating profit. Similar ratio to major Korean autos leaves them exposed with other analysts noting 67% of Hyundai (005380.KS) cars and 45% of Kia (000270.KS) cars sold in US were exported from Korea (Bloomberg). Over short term, auto tariffs seen increasing price of US cars by thousands of dollars (Reuters), though extent of pass-through seen varying between auto manufacturers. Over longer-term, Trump maintains tariffs will encourage foreign autos to move production to US, but analysts flagged logistical impediments, higher US cost base relative to Asia even with 25% tariffs, as well as likely domestic opposition to any offshoring attempts.

  • China corporate profits sluggish to start the year:

    • Industrial profits fell 0.3% y/y in Jan-Feb, following a 3.3% decline in 2024 and marks the smallest decrease since turning negative in September. Revenue growth of 2.8% negated by a 2.9% rise in operating costs. OP margins fell notably to 4.53% from 5.39% in 2024 and lower than at any stage over the course of last year. Manufacturing profits rose 4.8% though private enterprises dropped 9.0%. By sector, auto sector earnings up 11.7%, other transportation equipment surged 88.8% on a smaller base, electrical machinery and equipment down 2.4%, computer, communication and other electronics also fell 9.4%. Total operating earnings rose 2.8% and NBS said aggregate of equipment making segments grew 8.1%. Also noted tailwinds from trade-in programs for capital equipment and consumer goods. Autos were a beneficiary while noting more granular electronics breakdown of 125.5% growth in smart device makers, 19.9% in household kitchen appliances and 19.2% in household refrigeration appliances. Early takeaways were bearish -- Reuters noted latest figures come on the back of 11% growth in December alone while Bloomberg described the result as disappointing compared to an internal forecast of 9% growth. Reaffirms narrative of deflation/tariff risks as markets await more stimulus.

  • China banks accelerate disposal of bad loans to boost economy:

    • Bloomberg discussed how China's financial regulator is increasing pressure on major banks to write off property loans in bid to clean up balance sheets, and support broader economy. Article cited people familiar with the matter who said some banks doubled write-off targets for this year after removing CNY3.8T ($532B) of bad assets last year, been asked to prioritize disposal of non-performing real estate loans. However, article also cited Fitch analyst that warned drive could lead to further degradation in profit margins, capital ratios especially at lenders with relatively low provision coverage for bad loans. On positive side, move will restore confidence in banking sector as balance sheets improve and release capital to focus on expanding businesses. Said 'overall, its net positive'. Article said instruction underscores growing anxiety in Beijing as property crisis risks eroding balance sheets and hampering ability of banks to support areas favored by Beijing.

  • Notable Gainers:

    • +17.3% 1801.HK (Innovent Biologics): reports FY results with adjusted net income ahead of FactSet estimates

    • +7.4% 7732.JP (Topcon): KKR reportedly nearing deal to acquire Topcon

    • +5.6% 2319.HK (China Mengniu Dairy): reports FY results with net income attributable CNY104.5M vs guidance CNY50.0-250.0M

    • +5.5% 2388.HK (BOC Hong Kong (Holdings)): reports FY with net income attributable and net interest margin ahead of StreetAccount estimates

    • +2.7% 138040.KS (MERITZ Financial Group): launches KRW550.00B buyback; to run for 12 months starting today

  • Notable Decliners:

    • -11.8% 799.HK (IGG Inc): reports FY results with net income attributable HK$580.7M vs guidance HK$580M and FactSet HK$607.2M

    • -5.0% 7270.JP (Subaru): Trump announces 25% tariffs on all autos not made in the US

    • -4.3% 005380.KS (Hyundai Motor): Trump announces 25% tariffs on all autos not made in the US

    • -3.9% 9984.JP (SoftBank Group): OpenAI reportedly close to finalizing $40B funding round led by SoftBank

    • -2.8% 066570.KS (LG Electronics): LG Electronics India IPO reportedly likely to raise up to $1.7B (INR145.79B/KRW2.489T) at $10.5-11.5B (INR900.48-986.24B/KRW15.372-16.836T) valuation

    • -2.0% 7203.JP (Toyota Motor): Trump announces 25% tariffs on all autos not made in the US

• Data:

  • Economic:

    • China Jan-Feb

      • Industrial profits (0.3%) y/y vs (3.3%) in 2024

  • Markets:

    • Nikkei: (227.32) or (0.60%) to 37799.97

    • Hang Seng: 95.48 or +0.41% to 23578.80

    • Shanghai Composite: 5.05 or +0.15% to 3373.75

    • Shenzhen Composite: (1.51) or (0.07%) to 2044.61

    • ASX200: (30.00) or (0.38%) to 7969.00

    • KOSPI: (36.79) or (1.39%) to 2607.15

    • SENSEX: 327.72 or +0.42% to 77616.22

  • Currencies:

    • $-¥: (0.06) or (0.04%) to 150.5200

    • $-KRW: (4.56) or (0.31%) to 1464.2800

    • A$-$: +0.00 or +0.09% to 0.6304

    • $-INR: +0.10 or +0.11% to 85.7931

    • $-CNY: (0.00) or (0.06%) to 7.2640