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StreetAccount Summary - Asian Market Recap: Nikkei (0.00%), Hang Seng (0.46%), Shanghai Composite (0.40%) as of 04:10 ET

May 16 ,2025

• Synopsis:

  • Asian equities ended mixed Friday in another quiet session. Hong Kong and Shanghai's main boards ended lower but Shenzhen was a few points higher. There were small gains for Australia, South Korea and Taiwan, small losses in Singapore and India. Japan was flat. US futures higher now after being flat for most of the day, Europe with gains in the opening hour. US dollar lower; yen, AUD main gainers, yuan also slightly stronger. Treasuries higher at the short end, lower at the long. Crude oil and precious metals lower, base metals also giving up some recent gains. Cryptocurrencies a little lower.

  • Asia equities directionless for a second day with a lack of substantive newsflow to excite investors. China activity data for April on Monday seen as the next big regional catalyst along with the RBA decision later in the week. For this week, most markets held their early-week rally to record a fifth consecutive weekly gain with most major benchmarks back at or above levels prior to the launch of Trump's tariffs.

  • In regional developments Friday, Japan GDP data showed economy contracted by more than expected in Q1 as exports dragged, and private consumption growth failed to compensate. Japan's finance minister Kato said he still wants to include forex in trade negotiations with the US, with further hints that Treasury rollovers to super-long bonds could also form part of a deal. Trade negotiations continue with other countries with several claiming progress but at the APEC summit in Jeju, officials denied any collusion between Asia nations against the US. Singapore's volatile exports surged in April on frontloading effects, Malaysia's economy grew 4.4% in Q1 however its outlook was dimmed by trade uncertainties.

  • Nissan Motor (7201.JP) CEO said the company has sufficient capital to last another 12-18 months and said the company is open to working with technology companies based in China. LG Chem (051910.KS) is to issue $1B in forex bonds to be exchangeable for 4.1M shares in LG Energy Solutions (373220.KS). Singtel (Z74.SP) sold a 1.2% stake in Bharti Airtel (~532454.IN~) for S$2B ($1.54B), still has 28.3% stake worth S$48B. Singapore Airlines warned tariff and trade tensions on top of broader economic and geopolitical uncertainties could hurt demand for cargo and passenger traffic. Wan Hai Lines (2615.TT) said export routes from China to the US for the second half of May are fully booked, expects June's space to be tight. Lynas Rare Earths (LYC.AU) confirmed it had produced a heavy rare earth element at its Malaysian refinery. JSW Paints has entered exclusive talks to acquire Akzo Nobel India (500710.IN), outbidding a rival bid from Advent and Indigo Paints, according to local press reports.

• Digest:

  • Japan Finance Minister Kato reiterates aim for FX talks with Bessent:

    • Reuters cited comments from Finance Minister Kato in parliament Friday, repeating that he seeks to discuss FX with US Treasury Bessent. Said the two officials on 24-Apr reaffirmed consensus that FX rates should be set by markets and excessive volatility has adverse impacts of economic and financial stability. Kato hopes to build on this common understanding. Story recalled earlier remarks at a press conference that Kato wants to meet Bessent on the sidelines of the May 20-22 G7 meetings in Canada. Japan and US have agreed to keep FX topic separate from trade negotiations. But Kato has previously said that if he meets Bessent, they could naturally discuss foreign exchange as part of Japan's tariff negotiations. Nothing incremental on US Treasury holdings as officials have largely dismissed the notion of selling off foreign reserves. Still, Kato said earlier this month that this is a card in Japan's hand, though refrained from elaborating (Bloomberg). In a Bloomberg interview Thursday, opposition DPP leader Yuichiro Tamaki suggested Japan could roll over maturing Treasuries into superlong bonds in return for tariff concessions. Japan markets continue to see speculation that US will pressure Japan to reverse yen weakness previously cited as a key non-tariff barrier, though a Bloomberg source this week said US trade negotiators are not working to include currency pledges in the agreements.

  • BOJ board member Nakamura supports keeping rates steady for the time being:

    • In a speech, BOJ board member Nakamura, the lone dissenter at the January meeting and whose term expires 30-Jun, advocated for keeping policy settings unchanged for the time being. Called for careful examination of economic developments amid widespread concerns about US tariff impacts. Argued Japan is at a critical juncture in terms of whether it can transition the defining paradigm from cost cutting to growth driven by wages and investment without reverting to deflation. Discussed a range of risk factors including the contrast in wage hike conditions among large versus small firms, demographic headwinds and growing lag in Japan GDP long term growth vs US. Given extreme uncertainties, suggested that monetary policy should reflect the actual state of the economy and warned that a rush to hike rates even during a slowdown risks dampening consumption and investment. Described a scenario in which higher rates increase the debt servicing burden among household and corporate sectors, and when combined with US tariffs, leads to a vicious cycle of lower demand and prices. Acknowledged capacity for more wage hikes citing low labor share but longer term prospects hinge on boosting productivity, strengthening core businesses and raising international competitiveness.

  • Japan Q1 GDP softer than expected on external drags, inflation overhang:

    • GDP contracted 0.7% q/q annualized in Q1, weaker than expectations for a 0.2% decline. Follows revised 2.4% growth in the previous quarter and marks the first negative reading in a year. Main surprise came from external demand as exports unexpectedly fell, while imports were slightly above consensus. Net drag was partially offset by moderate capex growth and contribution from private inventories. Public demand was flat and private consumption was little changed as expected. Growth in semi-durables and services were negated by weaker durables and non-durables. Results largely confirmed views there were few domestic growth drivers. GDP deflator rose 3.3% y/y in Q1, following 2.9% in Q4, the strongest since 4Q23. Domestic demand deflator rose 2.7%, highest in six quarters. Inflation remains the broad headwind as soft real growth continued to contrast with relatively solid nominal growth. Annualized +3.1% q/q in Q1 extended nominal growth streak to six quarters. Gap was particularly notable in FY24, leaving real growth of 0.2% vs nominal 3.1%. Similarly, real employee compensation fell 1.3% q/q, first slide in six quarters and the weakest since 2Q20. Nominal compensation growth slowed to 0.6%, though remained positive for the seventh quarter.

  • Progress in US-Japan trade talks remain uncertain ahead of next round:

    • Nikkei reported US-Japan trade negotiators arranging third round of talks for this month with Japan lead negotiator Akazawa set to return to US after next week's Canada G7 meetings slated to run through 22-May. Working level discussions to be held as early as next week. Following a task force meeting Thursday, Akazawa told reporters they remain intent on pursuing tariff exemptions. Agenda for talks to center on expanding bilateral trade, addressing nontariff barriers and cooperation on economic security. Tokyo said to be preparing bargaining chips in each area. Trade focus on increasing Japan imports of US agricultural products such as corn and soybeans. Jiji reported US considering a broader revision to existing bilateral agreements, possibly portending a push for Japan to open up its farm product market. Story also said Japan's goal for tariff exemptions misaligns with US negotiations limited to reciprocal tariffs. Both articles indicated rice import expansion was floated but the proposal shelved amid backlash from LDP and farm industry groups. Auto discussions have also struggled to make progress as Japan proposals have so far been incremental. Previously reported Japan support for US shipbuilding fits into the economic security component and Tokyo looking to secure rare earth metals amid China export curbs, as well as strengthening semiconductor supply chains.

  • Skepticism US will reduce China tariffs below 30%:

    • Bloomberg survey of analysts and investors found low expectations US will reduce China tariff rate below 30% before late 2025. Largely reflects skepticism two sides can achieve relatively quick trade agreement beyond surface-level deals. Respondents almost evenly divided on whether tariffs will rise or fall below 30% in six months' time given uncertain path ahead. While early week market rally was driven largely by headline effects of US-China tariff reduction, agreement left many questions unanswered. Potential for complicated talks leaves fate of tariffs somewhat uncertain beyond 90-day pause after Trump warned levies could rise substantially depending on progress (though Bessent signaled pause could be extended). Trump claimed China agreed to open its markets, though no details on how/whether China will reduce barriers to foreign companies. Also no details on how two sides will address their trade imbalance and whether that will involve fresh purchase commitments by China. Still-onerous 30% tariff rate also expected to remain drag on exports and growth, keeping Chinese trade-oriented factories cautious about hiring (Reuters).

  • Notable Gainers:

    • +19.1% 003230.KS (SAMYANG FOODS): reports Q1 earnings with operating profit ahead of FactSet estimates

    • +15.1% 4751.JP (CyberAgent): reports H1 earnings; analysts broadly highlight margin improvement at Media & IP and Game

    • +5.6% 7181.JP (JAPAN POST INSURANCE): reports FY earnings with net income attributable ahead of FactSet estimates

    • +0.9% 8306.JP (Mitsubishi UFJ Financial): reports FY earnings with net interest income ahead of FactSet estimates

  • Notable Decliners:

    • -5.4% 373220.KS (LG Energy Solution): LG Chem to issue $1.00B (KRW1.395T) in foreign exchange bonds due 16-Jun-2028; bonds will be exchangeable for 4.1M shares of LG Energy Solution

    • -4.3% 9988.HK (Alibaba Group): reports Q4 earnings; revenue CNY236.45B vs StreetAccount CNY239.63B

    • -2.0% 8411.JP (Mizuho Financial): reports FY earnings; net income attributable below FactSet estimates

• Data:

  • Economic:

    • Japan Q1

      • GDP (0.7%) q/q annualized vs consensus (0.2%) and revised +2.4% in prior quarter

        • GDP (0.2%) q/q vs consensus (0.1%) and +0.6% in prior quarter

    • New Zealand Q2

      • 2-year inflation expectations 2.29% vs 2.06% in Q1

        • 1-year inflation expectations 2.41% vs 2.15% in Q1

    • Singapore April

      • Non-oil exports +12.4% y/y vs consensus +4.3% and +5.4% in prior month

        • Non-oil exports +10.4% m/m vs revised (7.5%) in prior month

  • Markets:

    • Nikkei: (1.79) or (0.00%) to 37753.72

    • Hang Seng: (108.11) or (0.46%) to 23345.05

    • Shanghai Composite: (13.36) or (0.40%) to 3367.46

    • Shenzhen Composite: 3.56 or +0.18% to 1986.50

    • ASX200: 46.20 or +0.56% to 8343.70

    • KOSPI: 5.51 or +0.21% to 2626.87

    • SENSEX: (222.75) or (0.27%) to 82307.99

  • Currencies:

    • $-¥: (0.38) or (0.26%) to 145.3050

    • $-KRW: (3.67) or (0.26%) to 1393.9700

    • A$-$: +0.00 or +0.27% to 0.6423

    • $-INR: +0.17 or +0.20% to 85.6095

    • $-CNY: (0.01) or (0.07%) to 7.2019