Apr 11 ,2025
Synopsis:
Asia equities ended mixed Friday as Hong Kong pared early losses to finish with gains. Japan's Nikkei and Topix maintained their losses but were well off their troughs, same for Singapore, Australia and South Korea. Taiwan ended with strong gains and India is also trading higher. Greater China opened lower but indexes finished positive. US futures volatile and now lower on China tariff reports late Friday, Europe opened with small gains since pared. US dollar lower but off bottom after DXY broke 100. Treasury yields higher but fell on China tariff news, JGB yields mixed. WTI futures holding above $60/bl, Brent also higher. Gold at fresh record high, base metals mixed.
Asia equities opened sharply lower only to rally on some hopes the worst of the tariff announcements were over. News Beijing would increase tariffs on US goods to 125% came after the market close in Hong Kong but quickly led to sharp selloff in Hong Kong futures, higher Treasury prices and lower dollar. Confirmation overnight the US would charge 145% for China-made imports led equities to selloff quickly at the open, only to turnaround albeit on few fresh news leads. China showing few signs of backing down in trade dispute after escalating US tariffs and filing additional complaint to WTO. Nevertheless, GDP growth forecast downgrades starting to filter through for China and warnings from governments and central banks over growth across the region also appearing.
Mainland China markets probably supported by state-owned funds continuing to buy local domestics and India higher Friday to end the week as a relative outperformer in the region thanks to its relative immunity from US tariffs. China, Japan and South Korea said to have discussed tariff impact at ASEAN+3 meeting. Malaysia economic activity data for February saw smaller retail growth and industrial output sinking.
SK Group (034730.KS) chairman has met with his TSMC (2330.TT) counterpart to discuss cooperation over chips. Country Garden (2007.HK) has secured creditor support for an offshore debt overhaul. Tata Consultancy Services (532540.IN) has warned US tariff chaos has hurt client sentiment. President Trump said he is not sure US Steel needs a deal with Nippon Steel's (5401.JP) because of his new tariffs.
Digest:
China raises tariffs on US goods to 125%, says it will ignore any further US retaliation:
Bloomberg reported post market close in Hong Kong China will raise US import taxes to 125% from 84% with effect from 12-Apr. Article said finance ministry indicated this would be final increase and it would ignore any further tariff increases from US on China-made goods. Finmin said given there is "no longer possibility of market acceptance" for US goods to be exported to China, it will pay "no attention" to it. China also reported new complaint to WTO over US's latest tariff measures, said US should bear responsibility for damages caused by tariffs. China's commerce ministry said Washington's use of excessively high tariffs have become "economically meaningless", revealed use of tariffs as tool for "bullying and coercion". Added, "It has become a joke". Hong Kong futures fell after announcement, US futures also lower and Europe markets pared early gains; dollar DXY index trading below 99.7 - lowest since late 2022.
White House clarifies total tariff rate on China is 145%, growing speculation China stocks may be delisted from US bourses:
White House clarified the previously announced China tariff rate of 125% does not include the 20% levy tied to fentanyl trafficking, taking the total to 145% (Bloomberg). Latest amendments to reciprocal tariff executive order included another increase in de minimis tariffs to 120% from 90% as well as per postal item fees. According to Bloomberg, President Trump told a reporter he thought the first deals are "very close" and voiced optimism that China would eventually come to the table. Also indicated flexibility on exemptions, including on the 10% floor, reaffirming bilateral trade deficits as the main factor. However, Trump stressed he would reimpose reciprocal tariffs if satisfactory deals were not struck. Treasury Secretary Bessent noted Treasury and Commerce Departments, USTR and Trump would all be involved in discussions and expressed confidence in achieve "great certainty over the next 90 days." Bloomberg also mentioned US-listed China shares fell on an unspecified report the Trump administration is considering a push to delist Chinese companies from American bourses. Follows Bessent's interview with Fox Business Wednesday, deflecting a question on the topic and said everything is on the table.
China GDP growth estimates coming down as Trump escalates tariffs:
President Trump's escalating tariff war against China prompting fresh downgrades to GDP growth estimates. Goldman Sachs reduced 2025 GDP growth forecast to 4.0% from 4.5%, reflecting 2.2% drag from 125% tariffs, while Citi lowered theirs to 4.2 from 4.7%, reflecting growth drag of at least 1.5%. While authorities are expected to respond with fiscal and monetary stimulus, there are thoughts more will be needed to support government's growth 2025 target of around 5%. Goldman now sees 60 bp of policy rate cuts (vs 40 bp previously) and augmented fiscal deficit of 14.5% (from 13.8% previously). Tariffs of 145% increasingly prohibitive for US-bound Chinese exporters with limited capacity to absorb additional levies. Already anecdotal reports emerging of mass order cancellations (FT) while China e-commerce retailers having to hike prices or preparing to exit US market. Chinese manufacturers seen in position of having to idle production and lay off workers if they cannot find alternative markets. However, still some hope worst-case scenario can be avoided with Trump voicing desire for a trade deal and Beijing saying it is open to dialogue.
South Korea to strengthen monitoring of financial markets, prepare contingency plans as trade war uncertainty escalates:
South Korea's finance minister Choi Sang Mok said government is to step up monitoring of forex, bonds and money markets in response to growing uncertainties stemming from US tariffs (Yonhap). Choi said despite 90-day reprieve over worst of tariffs, uncertainties remain. Said relevant financial agencies need to prepare response plans for various scenarios. Announcement made with BOK governor, financial services commission, financial supervisory service in attendance, underscoring how serious government taking market threats. Ministry added South Korea economy facing increasing downside risks because of tariff woes just as recovery in domestic demand is delayed, could also slow exports (Yonhap). Separately, data released showed South Korea exports rose 13.7% y/y in first ten days of April on strong semiconductor and auto demand with a strong growth in imports too. Chip exports rose 32% y/y, overall exports to US fell 0.6% (Yonhap).
Japan ruling coalition partner Komeito pushes for consumption tax cut on food products:
Yomiuri reported ruling coalition discussions on stimulus now steering towards a consumption tax hike on food products with Komeito pushing the idea. Article cited Komeito leader Saito acknowledging tax cuts would take time to implement given it would require legal changes, and there were calls to instead provide quicker cash payouts, though argued that payouts would be insufficient in providing sustained support. Party sources revealed a proposal to lower the consumption tax on food for a limited time. Story said there is some support from LDP members lobbying to include a consumption tax cut in their upper house election manifesto. Recalled LDP upper house chief secretary Matsuyama said in a Tuesday press conference they would not rule out a variety of measures including payouts and tax cuts. However, LDP General Council chair and former Finance Minister Suzuki opposed tax cuts out of concern about the erosion of social welfare funding. Article follows a Nikkei report that stimulus discussions began with an LDP proposal for cash payouts of JPY40K-50K ($278-$348) per person with entrenched views among party executives that tax cuts would be difficult to reverse, while Komeito had yet to commit to specifics.
Notable Gainers:
+12.5% 6532.JP (BayCurrent Inc): reports FY net income attributable ¥30.76B vs FactSet ¥30.34B; to launch up-to-¥3.0B buyback; revises FY26 dividend payout ratio to 40% from 20-30%
+11.1% 1112.HK (Health & Happiness (H&H) International Holdings): reports Q1 unaudited total group revenue CNY3.17B, +10.4% y/y
+10.0% 2615.TT (Wan Hai Lines): reports March revenue of NT$11.78B, +24.0% y/y
+9.5% SBM.AU (St. Barbara): Positive community support expressed for early renewal of the Simberi mining lease
+9.2% 2610.TT (China Airlines): reports March revenue NT$17.32B, +5.0% y/y; declares FY cash dividend NT$0.80/share; StreetAccount notes the year-ago dividend was NT$0.69/share
+8.5% IMR.AU (Imricor Medical Systems): commences VISABL-VT clinical trial
Notable Decliners:
-35.8% MVF.AU (Monash IVF Group): confirms media report regarding incident at Brisbane clinic; undertaking independent investigation
-6.7% 8766.JP (Tokio Marine Holdings): completes up-to-¥120.0B buyback
-4.4% EBO.AU (Ebos Group): completes placement raising A$200M (NZ$217M) at NZ$36.65/share
-2.4% 3697.JP (SHIFT Inc): reports Q2 net income attributable ¥2.52B vs FactSet ¥2.53B; guides FY net income attributable ¥7.90B vs FactSet ¥8.99B
Data:
Economic:
No economic data today
Markets:
Nikkei: (1,023.42) or (2.96%) to 33585.58
Hang Seng: 232.91 or +1.13% to 20914.69
Shanghai Composite: 14.59 or +0.45% to 3238.23
Shenzhen Composite: 13.39 or +0.72% to 1881.78
ASX200: (63.10) or (0.82%) to 7646.50
KOSPI: (12.34) or (0.50%) to 2432.72
SENSEX: 1,491.39 or +2.02% to 75338.54
Currencies:
$-¥: (1.41) or (0.97%) to 143.0390
$-KRW: (15.98) or (1.10%) to 1437.9500
A$-$: (0.00) or (0.21%) to 0.6212
$-INR: (0.17) or (0.20%) to 86.0647
$-CNY: +0.01 or +0.08% to 7.3203
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