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StreetAccount Summary - Asian Market Recap: Nikkei +0.51%, Hang Seng +0.43%, Shanghai Composite (0.18%) as of 04:10 ET

May 27 ,2025

• Synopsis:

  • Asia equities ended mixed Tuesday. Japan's main boards, Australia, the Hang Seng and Singapore all closed higher while mainland China, South Korea and Taiwan ended lower. Most of emerging Southeast Asia was also lower, India currently trading down. US futures stronger as they look to catch up on EU tariff news, Europe higher in the first hour. US dollar flat after trading lower earlier, won gained on improved sentiment indicators, yen now weaker after early strength. Treasury yields higher at the short end, lower at the long end; JGB yields mixed, CGB yields higher again. Crude oil, base and precious metals all down. Cryptocurrencies turning higher.

  • Asia equities directionless Tuesday as market participants await the next big catalyst. Another tick higher in US futures following yesterday's strong move proved support for developed Asia markets in Australia and Japan, and pulled the yen lower from recent peaks. Market focus still on the JGB market which today saw yields across tenors fall after Japan's finance minister sent a questionnaire to market participants asking for views on appropriate issuance amounts. Traders interpreted the move as an attempt by authorities to restore calm while Treasury yields turned lower on the same news.

  • In other developments, BOJ Governor Ueda also expressed caution on rising food prices and said the bank would raise rates if data continued to indicate economic recovery. South Korea's consumer and business sentiment improved on easing political uncertainty but Taiwan consumer sentiment deteriorated again. South Korea's presidential candidates set for final televised debate tonight ahead of Saturday's election with the BOK likely to trim rates Thursday. China's industrial profits improved in Jan-Apr with gains in the private sector offsetting a decline at state-owned firms.

  • Sony Group (6758.JP) is said to be mulling a spin off of its finance unit as latest move to transform company. Meituan (3690.HK) post better-than-expected Q1 results but underlying earnings quality remains challenged on rising pressure in the food delivery sector. Zijin Mining (601899.CH) is to spin off and list its gold subsidiary in Hong Kong. Samsung Electronics' (005930.KS) may participate in a private fundraising round in US healthcare software firm Exo Imaging which is being led by three private equity groups.

• Digest:

  • Japan MOF to meet with primary dealers, prompting speculation of adjustments to superlong issuance:

    • Nikkei reported MOF will meet with primary dealers on 20-Jun and expected to discuss recent developments in the superlong part of the curve. In light of deteriorating supply-demand conditions, this sparked speculation that superlong issuance may be adjusted. The article cited a questionnaire sent to market participants ahead of the meeting to gauge the appropriate issuance for each tenor, as well as views on recent market developments and actions expected of the ministry. While the survey content is said to be similar to the typical annual structure, concerns have elevated about the superlong sector in the wake of last week's 20-year auction that resulted in the longest tail since 1987. Speculation of issuance adjustments triggered a major rally in superlong JGBs with yields from 15-years and beyond down by double digits. Yet, the story cited comments from Finance Minister Kato's press conference today, clarifying that recent price action has not impeded the stable absorption of JGBs and essentially toned down the magnitude of the ministry's response. Recall that concerns about fiscal expansion have been a notable JGB theme since the ruling coalition retained government through minority rule, leaving it exposed to stimulus calls from opposition parties. On a flow basis, preferential habitat places the bulk of the onus on insurers to take up the slack in superlongs, though have balked at recent volatility.

  • Ueda says policy made more difficult by successive supply shocks, narrower gap between underlying inflation and target:

    • In a speech, BOJ Governor Ueda recounted the BOJ's recent downward revisions to the economic outlook, yet retaining the view that underlying inflation is expected to move toward 2% over the second half of the projection period. While risks to economy and prices are skewed downside for FY25/26, reaffirmed the core stance that adjustments to the degree of accommodation will be made if incoming data warrants more confidence in the baseline scenario. Stressed that uncertainties remain extremely high, warranting unbiased calibration of the likelihood of realizing the outlook. Notable discussion of the challenges in the treatment of successive supply side shocks (from import prices to food) that central banks typically look beyond. While continuing to justify ongoing accommodative policy despite actual inflation exceeding the 2% target for three years with the point that underlying inflation has yet to reach 2%, Ueda noted the use of inflation expectations as a proxy for underlying inflation (with the usual disclaimers about the imprecision of estimates) and the former has reached 1.5~2%, highest in 30 years, though stressed it was still below the 2% target. Yet, with underlying inflation closing in on the target, this is making analysis of food prices more delicate.

  • BYD, Meituan underline competitive pressures in China's weak domestic market:

    • China autos under notable pressure in recent days with focus centering on competitive pressures in the industry following BYD's (1211.HK) price cut announcement late last week. Group offered discounts of up to 30% across range of its models, prompting analyst warnings of a price war in an increasingly competitive EV landscape. Stock down more than 10% from last week's all-time high. Followed by Meituan's (3690.HK) earnings late Monday, where competition was again a key focus after management warned investors to brace for hit to short-term profitability from "whatever it takes" determination to win market share. Remarks underlined intensifying competition in food delivery space against rivals such as JD.com (9618.HK). Both stocks trading near Sep-2024 lows. Recent developments being viewed in context of challenging domestic market where consumer sentiment remains weak. Cut-throat competition practices getting attention in mainland press with People's Daily editorial on Monday urging action by regulators to prevent damaging price war (SCMP). Premier Li pledged to crack down on excessive price competition during March NPC though analysts noted this has yet to translate into systematic policy.

  • South Korea consumer and business sentiment improve as election day nears:

    • South Korea's consumer sentiment survey rebounded in June to level last seen just before martial law declaration in December. Composite consumer sentiment index rose to 101.8 from 93.8 in May, first time also above 100 indicating positivity in six months. Bank of Korea said easing political uncertainty, passage of supplementary budget, postponement of US tariffs key drivers of improved outlook. Said all six of index's sub-components rose m/m, sharpest gains in 'future economic conditions' reading however bank warned against viewing rebound as "definitive turning point" (KoreaHerald). Separate survey showed business sentiment also improved but remained negative for 39th consecutive month. Index at 94.7 from 85.0 in May (Yonhap). Improved sentiment readings come two days before Bank of Korea widely expected to lower base interest rate to support economy, and four days before country's general election in which economic growth is playing pivotal role in campaigning.

  • StreetAccount Event Preview: RBNZ 28-May policy meeting

    • RBNZ expected to reduce OCR by 25 bp to 3.25% at its policy meeting on Wednesday (Bloomberg). Key factor underpinning rate cut expectations has been pickup up global growth headwinds due to tariffs and US-China trade war, posing downside risks to New Zealand growth outlook. Domestic indicators have generally come in better than expected though underlying metrics consistent with still-weak economic growth. Flat employment growth Q1 was accompanied by further moderation in wage pressures. Consumption metrics remain subdued. Rebound in Q1 inflation driven largely by tradeables goods as domestic pricing pressures eased. Survey-based business inflation expectations also remain anchored. Inflation impact from tariffs somewhat ambiguous though economists generally see risks titled to downside beyond an expected transitory increase, giving RBNZ scope to stick with its easing bias. As a result, OCR track seen projecting terminal rate of below 3% (vs 3.10% in Feb-2025), implying at least one more rate cut through 2025.

  • Notable Gainers:

    • +10.8% 137310.KS (SD Biosensor): to receive KRW337.99B corporate tax refund

    • +2.1% 3690.HK (Meituan): reports Q1 earnings with headline figures ahead of FactSet estimates; analysts broadly note underlying earnings quality remains challenged due to rising pressure in the food delivery segment

    • +1.7% 068270.KS (Celltrion): to conduct 0.04-for-1 bonus issue of new shares

    • +0.5% 1310.HK (HKBN Ltd.): HKBN says China Mobile's takeover offer undervalues the company

  • Notable Decliners:

    • -16.8% 3738.HK (Vobile Group): 138.0M-share secondary priced at HK$3.78/share through CLSA

    • -4.3% 010130.KS (Korea Zinc Co.): South Korea FTC reportedly investigating chairman's circular shareholding for control defense

    • -3.7% 601899.CH (Zijin Mining Group): to spin off, separately list subsidiary Zijin Gold International in Hong Kong

• Data:

  • Economic:

    • China

      • Jan-Apr Industrial profits +1.4% y/y vs +0.8% in Jan-Mar

        • April industrial profits +3.0% y/y vs +2.6% in prior month

  • Markets:

    • Nikkei: 192.58 or +0.51% to 37724.11

    • Hang Seng: 99.66 or +0.43% to 23381.99

    • Shanghai Composite: (6.15) or (0.18%) to 3340.69

    • Shenzhen Composite: (5.65) or (0.29%) to 1971.03

    • ASX200: 46.60 or +0.56% to 8407.60

    • KOSPI: (7.18) or (0.27%) to 2637.22

    • SENSEX: (712.89) or (0.87%) to 81463.56

  • Currencies:

    • $-¥: +1.16 or +0.81% to 143.7240

    • $-KRW: +6.25 or +0.46% to 1371.9600

    • A$-$: (0.00) or (0.47%) to 0.6452

    • $-INR: +0.20 or +0.24% to 85.3979

    • $-CNY: +0.01 or +0.18% to 7.1936