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StreetAccount Summary - Asian Market Recap: Nikkei (0.68%), Hang Seng (0.05%), Shanghai Composite +0.00% as of 04:10 ET

May 19 ,2025

• Synopsis:

  • Asia equities ended mostly lower Monday. Technology-leaning boards in South Korea and Taiwan saw the sharpest of the declines alongside the Nikkei 225. There were also selloffs in Australia and most Southeast Asia. Greater China benchmarks all closed near the flatline. India also trading slightly lower. US futures lower, Europe opened with losses. US dollar sharply down, Asia currencies broadly higher. Treasury yields mostly higher with the 30-year yield briefly over 5.0%; JGB yields higher. Crude blends lower, precious metals up. Industrial metals under pressure, cryptocurrencies also down.

  • Asia equities drifted lower over the day as sentiment turned negative following Moody's downgrade to US government debt late Friday which sent long-dated Treasury yields to two-year highs during Asia trading today. US stock futures down as analysts began to compare the downgrade to the 'sell America' concerns sparked by Trump's original trade tariffs. The dollar under additional pressure late in the day following reports of a breakthrough in EU-UK post Brexit talks, supporting Asia currencies and plugging losses somewhat in Asia's equity markets.

  • In regional developments, China April economic activity data showed industrial output fell m/m from March but was better than expected. Retail sales growth also slowed while house prices declined again, albeit at a decelerated pace. Analysts said combination laid bare the need for further stimulus to support the economy particularly as the retail data, and last week's credit and inflation figures, indicated a still weak consumer base amid poor sentiment. BOJ Deputy Governor Uchida reiterated rate hikes in Japan would continue if forecasts materialize. Economists expect the RBA to cut by 25 bp rate on Tuesday accompanied by cautious guidance. Thailand's Q1 GDP growth was better than expected but authorities trimmed its FY outlook amid external uncertainties.

  • Nissan Motor (7201.JP) is considering shutting two car assembly plants in Japan while factories in Mexico, India, Argentina and South Africa are under consideration. Alibaba's (9988.HK) deal with Apple to make its AI available to iPhones in China has raised concerns with the US administration; Alibaba stock down sharply. Xiaomi (1810.HK) said it will invest at least CNY 50B (nearly $7B in chip design over the next ten years. Samsung SDI (006400.KS) cut the price of its new share issue by 17% after a tariff-related share selloff in April. Maybank (Malayan Banking, 1155.MK) said it had facilitated up to $545M of client investments into the Johor-Singapore SEZ. Vodafone Idea (532822.IN) has approached India's Supreme Court to challenge the government's rejection to waive more than $5B it owes authorities.

• Digest:

  • China activity data mixed:

    • Industrial production rose 6.1% y/y in April, above consensus 5.7% though softer than 7.7% in the previous month. Autos, solar cells and integrated circuits remained positive, though PCs, smartphones turned negative. Retail sales were up 5.1%, below consensus 5.8% and prior month's 5.9%. Consumer goods trade-in program remained the main tailwind. All major categories logged increases except for petroleum. Sharp growth came in notable segments such as household appliances, food and communications equipment. Autos edged higher. Fixed asset investment expanded 4.0% YTD, below consensus and prior month's 4.2%. NBS noted ex-real estate aggregate was up 8.0%. Infrastructure rose 8.0%, manufacturing up 8.8%. Real estate investment weakened to a 10.3% decline YTD, following 9.9% in the prior month, returning to double digits for the first time this year. Pace of narrowing in sales by floor space continued to stall at moderate levels, mirroring a plateau in financing. New construction starts remained in deep contraction. Unemployment rate edged down to 5.1% vs consensus and previous month's 5.2%. NBS overall assessment remained cautious, noting there are still many external uncertainties and the recovery foundation needs further reinforcement.

  • Moody's downgrades US credit rating to 'Aa1' from 'Aaa':

    • Moody's downgraded US credit rating from Aaa to Aa1 late Friday, citing growth in government debt and interest payments over more than a decade (Reuters, Bloomberg). Anticipates extension of TCJA to widen deficit from 6.4% of GDP in 2024 to almost 9% by 2035, debt to GDP from 98% to 134%, and interest payments to revenue from 18% to 30%. Moody's downgrade comes after it lowered US outlook to 'negative' from 'stable in Nov-2023 (FT), and more recently agency warned US fiscal position had deteriorated further due to tariffs, unfunded tax cuts and economic tail risks (FT). Treasury Secretary Bessent downplayed Moody's downgrade, describing it as a lagging indicator related to Biden administration's spending policies, and emphasizing Trump administration's determination to get spending down (NBC News). 'Sell America' trade got a lot of attention in April when bonds sold off sharply alongside equities, as reciprocal tariffs opened more cracks in US exceptionalism theme. Deficit concerns driven by Trump 2.0 legislative agenda have also been prevalent this year, contributing to upward pressure on long-term yields and widening term premium to highest since 2014 (Bloomberg).

  • China new home prices unchanged for second month in April:

    • New home prices in China were unchanged in April for a second month based on Reuters calculations of NBS data. New home prices were down 4.0% y/y, compared with 4.5% drop in March. NBS statistician said new home and second-home prices were flat or slightly lower from March across top-tier and lower-tier cities. 45 out of 70 cities reported m/m new home price drops, four more than March. Price drops have narrowed on annual basis. Bloomberg noted housing market slump remains concern for policymakers as trade war risks hurting China's export-driven economy, further curtailing property demand. Top officials are expected to remain committed to reboot property sector, seen as key to support overall consumer confidence. Renovating urban villages, streamlining policies for local governments to buy unsold homes will continue. Meanwhile housing ministry-affiliated newspaper said conditions are not mature for China to fully implement sales of only completed properties. Recall Bloomberg reported earlier that Beijing was mulling housing market overhaul to curb pre-sales model.

  • Japan opening up to lower US tariffs rather than exemptions:

    • Nikkei reported Japanese negotiators have signaled a willingness to discuss partial tariff reductions after US officials stood their ground against exemptions. Strategy shift was prompted by US agreements with the UK and China, both leaving a portion of additional levies in place. Japan said to have grown alarmed over the prospect of achieving no bargain on auto, steel and aluminum tariffs unless Tokyo showed compromise. Recalled President Trump had indicated Japan talks were the priority after the first talks on 16-Apr, though proceeded to strike deals with UK and China, forcing Japan to rethink its negotiation tactics. Article indicated growing impatience within the government, citing a senior official involved in the talks that the bar for a complete exemption is high and they've reached the point for exploring compromise. Japan risks a deadlock in talks if it continues to insist on eliminating all tariffs. Moreover, the concessions required to reach such a deal may well be higher than Tokyo is willing to go, such as purchasing large quantities of American goods or rescinding certain domestic regulations. Story detected contrast in phrasing between Prime Minister Ishiba's use of the word 'elimination' and lead negotiator Akazawa's 'reassessment.' Ishiba told the upper house budget committee Monday that Japan will not sacrifice the national interest for the sake of a deadline (Nikkei).

  • China's US Treasury holdings fall below UK's for the first time since 2000:

    • FT discussed recent global US Treasury holdings as of March, highlighting China has fallen below UK for the first time since October 2000, underling an ongoing shift in Beijing's FX reserve management. Chinese holdings fell to $765B from $784B in the previous month, while UK rose almost $30B to $779B. While China holdings have been trending down since peaking at more than $1.3T in 2011, data poses a warning signal for the US after Moody's sovereign credit downgrade, joining earlier actions from Fitch and S&P. Article noted Beijing has been gradually diversifying away from US Treasuries into other assets such as US agency bonds and gold, while some of the shift may also reflect valuation effects. Analysts believe China is expanding its proportion of US assets held by third party custodians, including Euroclear and Clearstream to obscure the true picture. In another facet, the share of China's Treasury holdings in most liquid short-term bills reached its highest since 2009, indicating a shortening duration. Story noted UK holdings does not reflect official reserves and includes institutional investors given its role as a domicile for international capital. Key point was that March data preceded the 'Liberation Day' tariffs and countries such as China could have made significant changes since then.

  • Notable Gainers:

    • +8.4% 2096.HK (Simcere Pharmaceutical Group): resurgence in cases of Covid-19 in Hong Kong

    • +7.2% 4676.JP (Fuji Media Holdings): reports Q4 earnings; withdraws operating profit ¥40.0B target next FY; formulates Reform Action Plan; board unanimously resolves to oppose Dalton's proposal of director election; appoints EVP Kenji Shimizu as new president

    • +2.9% 006400.KS (Samsung SDI): confirms pricing of 11.8M-share offering at KRW140,000/share

    • +2.4% 4816.JP (Toei Animation): reports FY earnings; revenue and operating profit ahead of FactSet estimates

  • Notable Decliners:

    • -7.6% 073240.KS (KUMHO TIRE): confirms fire at Gwangju Plant Refining Process

    • -3.4% 006260.KS (LS Corp): issues exchangeable bonds

    • -3.4% 9988.HK (Alibaba Group): reportedly US government raises concerns about Apple's deal to put Alibaba AI on iPhones in China

• Data:

  • Economic:

    • China April

      • Industrial production +6.1% y/y vs consensus +5.7% and +7.7% in prior month

      • Retail sales +5.1% y/y vs consensus +5.8% and +5.9% in prior month

      • Fixed asset investment (YTD) +4.0% y/y vs consensus +4.2% and +4.2% in prior month

      • Unemployment rate 5.1% vs consensus 5.2% and 5.2% in prior month

      • New house prices 0.0% m/m vs 0.0% in prior month

    • New Zealand Q1

      • PPI Input +2.9% versus (0.9%) in prior quarter

      • PPI Output +2.1% versus (0.1%) in prior quarter

  • Markets:

    • Nikkei: (255.09) or (0.68%) to 37498.63

    • Hang Seng: (12.33) or (0.05%) to 23332.72

    • Shanghai Composite: 0.12 or +0.00% to 3367.58

    • Shenzhen Composite: 6.63 or +0.33% to 1993.14

    • ASX200: (48.60) or (0.58%) to 8295.10

    • KOSPI: (23.45) or (0.89%) to 2603.42

    • SENSEX: (103.56) or (0.13%) to 82227.03

  • Currencies:

    • $-¥: (0.74) or (0.51%) to 144.9000

    • $-KRW: (10.10) or (0.72%) to 1388.6600

    • A$-$: +0.00 or +0.31% to 0.6423

    • $-INR: (0.20) or (0.24%) to 85.3951

    • $-CNY: +0.00 or +0.03% to 7.2117