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StreetAccount Summary - Asian Market Recap: Nikkei +0.38%, Hang Seng (0.04%), Shanghai Composite (0.20%) as of 04:10 ET

Apr 28 ,2025

• Synopsis:

  • Asian equities ended mixed Monday. Japan's boards opened higher but traded away from their highs by the close; gains for Taiwan, Australia and most of Southeast Asia. South Korea's Kospi a few points higher, Singapore's STI a few points lower. Greater China lower led by Shenzhen. India markets trading higher following several robust earnings releases over the weekend. US futures slightly lower, Europe opened with small gains. US dollar flat, no movement of note in Asia currencies. Treasuries mixed. Precious metals lower, oil futures slightly higher, some pressure on base metals after Beijing failed to introduce immediate economic stimulus measures. Cryptocurrencies supported.

  • Asia markets followed through from last week's advances to post a limited day's gains. Newsflow was light with few notable tariff-related stories over the weekend to drive stocks firmly in one direction or another although the tone of what there was, was more optimistic, which probably lent support to equities. In regional developments, a press conference involving China NDRC, Ministry of Commerce and PBOC largely stuck to Friday's Politburo messages that vowed emergency efforts in response to external shocks.

  • In macro developments, China year-to-date industrial profit growth turned positive in March for first time since Aug-24 amid an acceleration in manufacturing profits. China's vice head of state planning said he was confident the country could its reach 5% growth target. Taiwan's consumer confidence fell to a 12-month low. Singapore's unemployment rate rose to 2.1% in Q1, its highest in a year and just days before the country's general election.

  • Toyota Motor's (7203.JP) chairman said the company was exploring a potential buyout of Toyota Industries (6201.JP) of which it already owns 24%. The US and Japan are considering cooperation in commercial ships that could be converted to military use, benefiting Japanese shipbuilders including Mitsubishi Heavy Industries (7011.JP) and Mitsui E&S (7003.JP). Bright Smart Securities & Commodities (1428.HK) has sold a 50.55% stake to Ant Group; shares surged. Melco International (200.HK) proposed raising SK$780M in a 1:2 rights offering but shares ended steeply lower. SK Hynix (000660.KS) is to review the supply of equipment from Hanmi Semiconductor after the latter withdrew its maintenance personnel from SK's HDM production line. SK Telecom (01760.SK) disclosed it had suffered a customer data leak earlier this month in a cyberattack.

• Digest:

  • BOJ said to keep policy rate on hold this week, attention on economic forecast downgrades:

    • Nikkei front-page preview of the BOJ meeting on Wed/Thu indicated board members plan to leave the policy rate unchanged at 0.5%. Added GDP growth projections expected to be revised down, though emphasized officials still monitoring developments with uncertainties related to tariff impacts blurring the outlook. Noted the elevated importance of the April Outlook Report, which will extend the projection period through FY27. Suggested GDP growth may be downgraded to a sub-1% pace in FY25-26 (currently 1.1% and 1.0% respectively) while FY25 core CPI inflation could be downgraded to below 2% from 2.4%. With much of the outlook dependent on the outcome of US-Japan trade talks, cited internal thoughts that economic forecasts will be labeled as provisional. Separately, the BOJ Watcher survey showed 28 out of 29 respondents looked for no rate change this week amid heightened uncertainties and notable sentiment that BOJ is more cautious towards rate hike hikes. Going forward, 28 forecasters still expect the next rate hike to come this year with the modal response looking for September (7) followed by July (6). Such calls were based on solid domestic inflation dynamics. Another seven respondents expect the next move to be delayed to next year (mostly Q1) as they see a higher bar given the extent of uncertainties. Terminal rate projections still saw the modal response at 1.0% (9) though followed closely by 1.5% (8) to leave risks leaning to the upside.

  • Confusion surrounding state of US-China trade negotiations:

    • Conflicting statements about state of US-China trade talks underlining sense of uncertainty about de-escalation (Reuters). President Trump asserted trade negotiations happening and China wants to make a deal, claiming he has spoken to President Xi numerous times (TIME, Reuters). Treasury Secretary Bessent repeated US and China in talks, arguing Beijing's denials aimed at its domestic audience (Axios). Markets latched onto some positive developments last week with Trump flagging substantial China tariff cut and China exempting select US imports from tariffs. Still, Trump on Friday demanded concessions from China in return for tariff relief while Beijing continues to insist on US unilaterally dropping tariffs before negotiations. Some thoughts China's US tariff exemptions borne more out of need to protect vulnerable industries (link). Multiple press articles discussed Xi's willingness to ride out a trade war than be seen to have caved in while some US demands may prove untenable for China, including fully opening its markets, addressing FX manipulation, and ending state subsidies and IP theft (Politico). SCMP also highlighted how China began preparing for Trump's tariffs well before US election, giving it time to formulate policy toolbox aimed at fighting back and countering economic shocks.

  • US positive on Asia trade talks, though there are some sticking points:

    • US-Asia trade talks continue this week with Trump and Bessent sounding optimistic note (Bloomberg, Reuters). Bessent had foreshadowed agreement of understanding with South Korea with Seoul highlighting areas of cooperation on shipbuilding, investment and participation in US energy projects. Japan's top trade negotiator Ryosei Akazawa heads into second round of negotiations with latest reports noting Tokyo offering to boost US corn and soybean purchases (Nikkei). Elsewhere, Southeast Asian nations have offered to increase imports of US agricultural products and LNG while Vietnam making efforts to curtail Chinese transshipments. US-India talks seem to have advanced the most with two sides agreeing on terms of reference for trade pact. Still, there are potential sticking points with Japan seen resisting demands for greater US access to domestic agricultural and automotive markets (Reuters). Asian countries with strong China trade ties seen pushing back against US demands to curb trade with Beijing. Given tight deadline, agreements seen falling well short of traditional trade deals that can take months and years to complete. Press sources noted US planning framework to streamline talks ahead of 8-Jul deadline, covering tariffs, non-tariff barriers, economic security and other commercial issues (link). Nations that fail to strike deals by then would face reciprocal tariffs.

  • Plunging cargo shipments from China to US risk another supply shock:

    • While markets awaiting offramp in US-China trade war, press highlighting how tariffs already stifling bilateral trade with looming risk of supply chain disruptions. Freight companies projecting a steep drop in cargo shipments from China to ports on US west and east coasts. Anticipated drop off in shipments follows months where importers pulled forward orders ahead of tariffs. Some Chinese factories have been canceling orders and halting production, putting jobs at risk. Meanwhile, there has been a surge in bookings from Southeast Asia as firms rush to take advantage of the current pause in reciprocal tariffs. However, concerns are that US companies may need to restock inventories as soon as mid-May with retail executives recently warning about risk of empty shelves (Bloomberg). Narrowing timeframe driving thoughts it may be too late to reverse the damage. Even if tariffs were to quickly reverse, there are concerns a sudden surge in cargo demand from China will create Covid-era bottlenecks and fuel another surge in freight rates with cargo carriers having sharply reduced capacity in response to weaker demand.

  • China corporate profits turn positive, government trade-in subsidies remain the main tailwind:

    • Industrial profits rose 2.6% y/y in March, following a 0.3% decline in Jan-Feb. Leaves YTD Jan-Mar aggregate up 0.8%, returning to growth for the first time since last August. Revenue growth of 3.4% still largely matched by 3.6% growth in operating costs. OP margins recovered somewhat to 4.70% from 4.53%, though still notably below the 5% range seen throughout last year. Manufacturing profit growth accelerated to 7.6% from 4.8%. Electrical machinery sector up 7.5%, PC, communication and other electronics up 3.2%. However, autos turned to a 6.2% drop following 11.7% growth in Jan-Feb. By ownership structure, private enterprise earnings were still down 0.3%, though narrowed markedly from the prior 9.0% drop. Separately, SOE profits expanded 1.7% y/y in Q1 (Xinhua). NBS still cited government trade-in subsidies as the key tailwind alongside secular strength in tech. Maintained cautious assessment highlighting increasing complexity and severity of the external environment, though encouraged by emerging effects from policy support. Few notable takeaways after the weekend data release. Bloomberg kept the focus on future stimulus, recalling latest pledges out of last week's Politburo meeting.

  • Notable Gainers:

    • +12.8% 008770.KS (HOTEL SHILLA Co.): reports Q1 earnings with operating profit ahead of StreetAccount estimates

    • +6.6% 4063.JP (Shin-Etsu Chemical): reports Q4 earnings; to launch up to 200.0M-share buyback for up to ¥500B

    • +6.4% 300274.CH (Sungrow Power Supply): reports Q1 earnings with revenue CNY19.04B, +51% vs year-ago CNY12.61B

    • +3.9% 4503.JP (Astellas Pharma): reports Q4 results with core profit ahead of FactSet estimates

    • +3.6% 7203.JP (Toyota Motor): Toyota chairman reportedly proposes Toyota Industries buyout; following media reports company notes that it's exploring various possibilities, including partial investment from TMC

    • +2.4% 7011.JP (Mitsubishi Heavy Industries): US reportedly in talks with Japan about dual-use shipbuilding

  • Notable Decliners:

    • -13.7% 200.HK (Melco International Development): proposes to raise HK$780M by issuing up to 758.3M rights shares at subscription price of HK$1.0286 per rights share

    • -11.8% 9926.HK (Akeso Inc): discloses overall survival data from HARMONi-2 trial disclosed

    • -8.5% 285.HK (BYD Electronic (International)): reports Q1 earnings

    • -6.7% 017670.KS (SK Telecom): trading lower in aftermath of cyberattack resulting in USIM information leakage

    • -5.9% 138930.KS (BNK Financial Group): reports Q1 earnings with NII below StreetAccount estimates

    • -5.8% 6988.JP (Nitto Denko): reports FY earnings

    • -4.8% 6857.JP (Advantest): reports Q4 earnings with revenue ahead of StreetAccount estimates; launches ¥70B buyback program

    • -0.7% 6861.JP (KEYENCE): reports FY results with operating income ahead of FactSet estimates

    • -0.5% 012750.KS (S-1 Corp. (Korea)): reports Q1 earnings with revenue below FactSet estimates

• Data:

  • Economic:

    • China

      • Jan-Mar 2024 industrial profits +0.8% y/y vs (0.3%) in Jan-Feb

        • March industrial profits +2.6% y/y vs (0.3%) in Jan-Feb

  • Markets:

    • Nikkei: 134.25 or +0.38% to 35839.99

    • Hang Seng: (8.78) or (0.04%) to 21971.96

    • Shanghai Composite: (6.65) or (0.20%) to 3288.41

    • Shenzhen Composite: (17.90) or (0.93%) to 1897.75

    • ASX200: 28.90 or +0.36% to 7997.10

    • KOSPI: 2.56 or +0.10% to 2548.86

    • SENSEX: 1,050.13 or +1.33% to 80262.66

  • Currencies:

    • $-¥: (0.08) or (0.06%) to 143.5790

    • $-KRW: +4.86 or +0.34% to 1443.2200

    • A$-$: (0.00) or (0.39%) to 0.6371

    • $-INR: (0.24) or (0.29%) to 85.1404

    • $-CNY: +0.01 or +0.14% to 7.2980