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StreetAccount Summary - Asian Market Recap: Nikkei closed, Hang Seng +0.68%, Shanghai Composite +0.72% as of 04:10 ET

Jul 21 ,2025

• Synopsis:

  • Asian equities mostly higher Monday. Greater China continued to advance with Hong Kong and Shanghai both closing at strongest levels since early 2022. Infrastructure names rallied following start of construction of mega dam project in Tibet. Japan closed for a holiday. Korea advanced while Taiwan weighed down by TSMC pullback. Singapore hit new all-time high. Australia was major laggard and posted biggest decline since April. India is trading higher. US futures rise. Yen pulled back some of its earlier advance against dollar. Treasury yields lower across tenors. Crude little changed. Gold and copper nudging higher. Bitcoin also advancing.

  • Sunday's Japan upper house election was major headline development with ruling LDP/Komeito losing its majority, which analysts pointed to increased political and policy uncertainty. PM Ishiba vowed to stay on as PM though some LDP lawmakers are reportedly calling him to step down. Lead trade negotiator Akazawa said election results wouldn't affect tariff talks with US as Japan will be hit 25% tariffs from 1-Aug and he is preparing to visit Washington for eighth round of negotiations. With little reactions Monday due to a holiday, except some early yen strength and later reversed, markets are bracing for weaker yen, higher JGB yields when market reopens Tuesday.

  • China kept 1Y and 5Y loan prime rates unchanged as expected. Follows last week's stronger-than-expected Q2 GDP and June activity data, which economists argued reduced stimulus urgency. SCMP highlighted expectations of a Trump-Xi meeting at APEC summit South Korea in late October, if not sooner. Beijing also confirmed top leaders will meet EU's von der Leyen and Costa on Thursday. Meanwhile added it would take countermeasures after EU included Chinese companies and banks in its latest sanctions against Russia as tensions between Beijing and Brussels simmer ahead of the summit.

  • Elsewhere New Zealand Q2 inflation came in just below expectations, strengthening expectations of an RBNZ rate cut in August. South Korea (adj) exports saw tepid growth in first 20 days of July, US-bound shipments contracted. Singapore's MAS will place S$1.1B ($856M) with three asset managers as part of S$5B program to boost local equity market. Philippines President Marcos to meet Trump in Washington this week, hoping to secure a more favorable deal for Manila.

  • Chinese infrastructure, cement stocks surged on launch of construction of hydropower project in Tibet, including Power Construction Corporation of China (601669.CH), China Energy Engineering Corporation (3996.HK), Tibet Tianlu (600326.CH), Huaxin Cement (6655.HK). Nvidia (NVDA) CEO Jensen Huang said company is collaborating with Xiaomi (1810.HK) on co-developing AI, autonomous driving.

• Digest:

  • Japan markets bracing for weaker yen, higher JGB yields tomorrow:

    • Market reactions limited Monday in the immediate aftermath of the upper house election due to a public holiday. Some early yen strength was largely reversed. Nikkei discussed expectations for pending volatility when domestic markets re-open Tuesday. Article highlighted two main themes -- (1) With cost of living relief policies proving the main election battleground, the largest opposition parties have all advocated for some variation of consumption tax cuts (while Prime Minister Ishiba has repeatedly rejected the idea). Minority government will need support from somewhere to pass legislation, including budget bills. Recall the coalition needed the DPP in the lower house to pass the FY25 budget bill, yielding some ground on tax policies. Mitsui Sumitomo FX strategy suggested that fiscal expansion will lead to 'adverse' increase in bond yields and will eventually lead USD/JPY towards 150. Next focus set to be the 40-year JGB auction Wednesday. Fukuoka FG wary of credit rating downgrades, which would translate to a long term yen overhang. While CFTC data shows hedge funds maintain large long yen positions, complete capitulation estimated to drive USD/JPY to around 155. (2) With no US-Japan trade deal in the offing, crystallization of a 25% tariff rate on Japan exports to US seen adding to yen selling pressure.

  • Japan ruling coalition loses upper house majority:

    • According to NHK, ruling coalition won 47 seats (LDP 39, Komeito 8) in Sunday's upper house election with all seats called. This is below the 50 required to maintain majority control of the house. LDP suffered the biggest losses, and its 39 total was the third lowest on record, while Komeito's 8 seats marked its worst result ever (Yomiuri). Main gainers were DPP and Sanseito, consistent with preceding polls. Other notable opposition parties CDP and JIP were little changed. While further complications in policymaking now looking certain, coalition looking to continue with the status quo for now. Prime Minister Ishiba intends to stay in office (against external speculation he will be forced to step down) amid concerns that a resignation at this point would exacerbate political instability (Kyodo). LDP-Komeito leaders planning to meet on Monday and expected to confirm the coalition will govern via minority (NHK). Larger opposition parties have so far largely ruled out joining the coalition (Nikkei). Cost of living crisis emerged as the dominant issue for voters. Ishiba remained insistent there would be no consumption tax cut while opposition stances skewing in favor (Nikkei). Recall that fiscal policy risk has been the central theme driving up superlong JGB yields lately.

  • China LPRs unchanged as expected:

    • China LPRs were unchanged, in line with unanimous expectations, with 1y at 3.00% and 5y at 3.50%. Reuters preview discussed mild easing expectations following resilience in headline Q2 GDP, where stronger data has been viewed by economists as reducing the urgency for fresh stimulus. Policymakers expected to save support measures until tariff fallout risks materialize. Still, patchy composition of economic growth sustaining debate over the outlook. On balance, consensus 2025 GDP growth forecasts have recovered somewhat since the US-China Geneva talks, after shifting down in reaction to the preceding escalation in the trade war. Yet, market consensus remains below the government target of around 5%. Easing expectations in H2 remain moderate and waning somewhat as a function of better growth prospects. There has been relatively more action in PBOC liquidity injections lately; most recent attention went to notable provisions last week in response to an overshoot in overnight and 7-day repo rates above the policy rate (Bloomberg). Tighter supply-demand conditions mainly attributed to government bond issuance and seasonally elevated tax payments.

  • Tariff deadline nears as US eyes industry-specific duties:

    • Another flurry of trade headlines as clock ticks down 1-Aug, which Commerce Secretary Lutnick said remains a hard deadline for tariffs (CBS News). Clarified negotiations can continue after 1-Aug but higher levies will still kick in on that date. Bloomberg sources noted Trump administration planning to coincide 1-Aug tariffs with separate industry-specific levies. Trump said copper tariffs will come into effect 1-Aug with sources revealing levies on lumber, chips, critical minerals and pharmaceuticals to follow. Added that sectoral tariffs will cover 30-70% of each country's imports and rest will be subject to country-specific duties. Meanwhile, bilateral negotiations continue with Japan's top negotiator Akazawa to visit Washington this week in bid to try and break deadlock over issues such as auto tariffs while protecting national interests (Bloomberg). South Korea national security adviser also planning to visit US after recently floating idea of including security issues in trade talks (Reuters). Bloomberg reported EU preparing for no-deal scenario and retaliatory measures as US eyes near-universal tariff of more than 10% on the bloc with fewer exemptions.

  • China property stocks struggle to rebound amid underwhelming support, regional divergences:

    • Bloomberg noted its BI gauge of Chinese developers posted biggest weekly drop in four months last week after a high-level meeting, Central Urban Work Conference, failed to announce any meaningful measures to revive struggling property sector. Added the index has dropped nearly 9% YTD, compared with 23% gain in Hang Seng China Enterprises Index. It fell over 80% since 2018 peak. Meanwhile index's surge of 8.5% on 10-Jul, biggest single-day advance since February, turned to be short-lived as speculation that authorities would announce supportive measures at the urban conference did not materialize. Analysts pointed to much less significant role property sector is playing in China's economy, while Wall Street banks see sector as tactical buy and recommend only state-owned enterprises with good visibility. FT's analysis of Wind data showed land sales across lower-tier Chinese cities have dropped to lowest levels since at least 2011 when data became available, indicating full recovery nationwide remains unlikely. Goldman also expected substantial regional divergences with price stabilization only in higher-tier cities by end-2026.

  • Notable Gainers:

    • +10% 112610.KS (CS Wind): receives KRW82.36B contract from Vestas for wind towers

    • +8.3% 336.HK (Huabao International Holdings): guides H1 pretax income CNY151.2-177.2M vs year-ago CNY79.0M

    • +2.3% 601633.CH (Great Wall Motor): reports preliminary H1 revenue CNY92.37B vs year-ago CNY91.43B

    • +0.5% 068270.KS (Celltrion): reports preliminary Q2 operating profit KRW242.47B vs FactSet KRW245.19B

  • Notable Decliners:

    • -9.2% 003240.KS (Taekwang Industrial): activist Truston reportedly sells half of its holdings in Taekwang Industrial

    • -3.4% 500325.IN (Reliance Industries): reports Q1 earnings

• Data:

  • Economic:

    • New Zealand Q2 CPI +0.5% q/q vs consensus +0.6% and +0.9% in Q1

      • CPI +2.7% y/y vs consensus +2.8% and +2.5% in Q1

  • Markets:

    • Nikkei: 0.00 or 0.00% to 39819.11

    • Hang Seng: 168.48 or +0.68% to 24994.14

    • Shanghai Composite: 25.31 or +0.72% to 3559.79

    • Shenzhen Composite: 22.57 or +1.05% to 2176.28

    • ASX200: (89.00) or (1.02%) to 8668.20

    • KOSPI: 22.74 or +0.71% to 3210.81

    • SENSEX: 0.00 or 0.00% to 81757.73

  • Currencies:

    • $-¥: (0.82) or (0.55%) to 148.0110

    • $-KRW: (3.61) or (0.26%) to 1387.5900

    • A$-$: (0.00) or (0.38%) to 0.6511

    • $-INR: +0.11 or +0.13% to 86.2645

    • $-CNY: (0.00) or (0.05%) to 7.1743