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StreetAccount Summary - Asian Market Recap: Nikkei (1.25%), Hang Seng +0.92%, Shanghai Composite +0.66% as of 04:10 ET

Aug 04 ,2025

• Synopsis:

  • Asian equities ended mixed Monday. Japan's benchmarks gapped lower but rallied to close at their day's high point. Hong Kong and mainland China benchmarks were higher, Singapore and India also rallied. South Korea's Kospi bounced back from last week's selloff but Taiwan's Taiex ended lower. Southeast Asia ended largely higher. US futures higher, Europe markets rallying in the opening hour of trade. US dollar weaker, yen weaker, yuan stronger, AUD higher on inflation uptick, other Asia currencies unchanged. Treasury yields higher across tenors. Crude contracts easing back, precious metals up, base metals mixed.

  • Asia markets lower at the open but most were either off their lows or slightly higher by the close as investors grappled with Friday's US payrolls number, the political backlash from President Trump, and potential for the Fed to cut rates sooner than previously expected: Fed Fund Futures indicate a 78% chance of a Fed cut in September, up from 63% last week. Markets also continued to digest trade tariffs, with India markets brushing off the threat of a 25% import tax following a defiant speech from PM Modi, and instead looked ahead to the RBI's decision Wednesday, which could see a 25bps trim.

  • South Korea's Kospi bounced back somewhat after suggestions the government may dial back its tax-raising plans. Oil-related stocks on the defensive after OPEC+ announced a production hike that caused crude prices to fall sharply late Friday. 10Y CGB yields fell after Beijing announced it would resume taxation of bond interest income after a 10-year absence. Australia sovereign yields higher after an inflation gauge unexpectedly rose, prompting a rethink over a potential RBA cut later this month.

  • Mitsubishi Corp (8058.JP) is to buy a further 532M shares in Thai Union Group (TU.TB) as part of a strategic tie up. BYD (9888.HK) posted monthly sales that barely grew y/y and were 10% lower m/m, faces headwinds in reaching annual target; India's Adani Group is said to be in talks with BYD over the manufacture of EV batteries in India. China Mobile (941.HK) has bought a 14.4% stake in HKBN (1310.HK) from Twin Holdings, will own 29.9% after deal completed. Bluescope Steel (BSL.AU) said it will lead a collaboration agreement that will include POSCO Holdings (005490.KS), Nippon Steel (5401.JP) and JSW Steel (500228.IN) in a non-binding, indicative expression of interest for Whyalla Steelworks. Thai Airways (THAI.TB) traded for the first time in five years after it emerged from a $12B debt restructuring.

• Digest:

  • Countries weigh response to Trump's tariffs:

    • Fallout continues from President Trump's tariff announcements as countries facing steepest levies contemplate their response. Hit with 25% tariffs, India voiced defiance with PM Modi urging citizens to buy local products (Bloomberg), though sources noted India remains engaged with US (Reuters). Delhi also reaffirmed ties with Moscow (Bloomberg) while press sources say India hasn't told refiners to stop buying Russian crude (Bloomberg, Reuters), even as White House accused India of funding Russia's Ukraine war (SCMP). Switzerland among hardest hit nations with 39% tariff, prompting business minster to weigh a revised trade offer to US that includes stepped up purchase commitments (Reuters). Trump hit Brazil with additional 40% tariffs amid a diplomatic and trade row, though while President Lula struck defiant tone he also indicated openness to talks (Bloomberg). Canada said open to reaching deal that results in lower tariffs ahead of possible talks between Trump and Carney in coming days (FT). Meanwhile, White House giving positive signals on direction of US-China trade talks with Treasury Secretary Bessent saying he believes US has makings of a trade deal with Beijing (Reuters). USTR Greer also gave optimistic take on talks, stating they currently focused whether to extend tariff deadline (CBS News).

  • OPEC+ to increase output by 574K bpd in September, fully unwinding 2.2M of voluntary cuts:

    • On Sunday OPEC+ announced it will raise September crude output by 547Kbpd, marking full unwind of 2.2Mbpd output cut made in 2023 and includes extra allowance pushed by UAE (Bloomberg, Reuters). Statement cited steady global economic outlook, healthy market fundamentals and low inventories though sources added magnitude of production increases also reflected desire by Saudi Arabia to win back market share. Speed of production hikes over recent months has fed concerns about looming market surplus later this year ahead of seasonal slowdown in demand. IEA estimated 2Mbpd surplus in Q4 amid waning consumption. Attention now turns to other tranches of OPEC+ output cuts with sources saying group will consider whether to reinstate 1.66Mbpd of voluntary cuts that remain in place until end-2026. Any decision on that will depend on market conditions though also potential for group to pause or even reverse production increases if prices come under pressure. President Trump's decision on whether to impose secondary sanctions targeting Russian crude shapes as another potential complication (Bloomberg).

  • China to resume taxation on government bond interest income:

    • China's ministry of finance issued statement Friday that government will resume collection of value-added tax on interest income from bonds newly issued by central and local governments, as well as those from financial institutions from 8-Aug. Bonds issued before the date will be exempted from the tax. Bloomberg noted move will likely increase cost of borrowing new bonds as tax exemption on interest income from sovereign bonds had been in place since 1990s. Announcement led investors rush to add positions on existing bonds, pushing 10Y CGB yield to below 1.70%. Huatai Securities said the tax may widen yield gap between existing and new bonds by about five to ten bp. Meanwhile Yicai citing industry experts noted overall impact would be "manageable" given outstanding amount of bonds accounted for nearly 70% of country's total as of end-June while 6% rate will only be applied to onshore investors. Added previous policy of tax-exemption on interest income led to more investors holding bonds until maturity, resulting in low market liquidity and high liquidity premium. Move seen likely to enhance trading activity of government bonds and role of government bond yield curve as pricing benchmark.

  • US and China to pitch competing AI strategies to Asian countries:

    • US and China to feature in APEC summit, which began Monday with focus on technology (link). Two countries released competing AI strategies over recent weeks with press highlighting signs of emerging battle to win global influence. White House AI summit blueprint envisioned increased adoption of American AI technology globally. At last week's AI summit China proposed new global governance body and promotion of its own technological advances in fostering an international open-source community (contrasting to US where the more advanced models are private), as Beijing vies for influence in Global South (Bloomberg). China making advances in developing domestic AI ecosystem following initial DeepSeek breakthrough with analysts estimating country will be 82% self-sufficient in AI chips by 2027, up from 35% in 2024 (link). Earlier this year Huawei CloudMatrix cluster using 384 Ascend 910C chips claimed to have outperformed NVDA on some metrics. Trump administration has recently moved to adjust its approach on export controls with relaxation of Nvidia H20 chips seen as attempt at blunting Huawei and Chinese efforts to accelerate development of domestic AI chips that can challenge US supremacy.

  • Trump's transshipment tariffs a risk for Southeast Asia:

    • One component of US trade deals with trading partners has been 40% tariffs on goods transshipped through their country, ostensibly aimed at limiting China's role in supply chains and combatting its attempts to avoid US tariffs. Details on how this will be enforced are lacking with administration to announce rules of origin for transshipped goods in few weeks (NY Times). However, analysts argue enforcement will be a challenge and may only encourage further trade diversion. FT also highlighted how threat of tariffs on Southeast Asian countries has encouraged some China manufacturers to rethink "China plus one" strategy of setting up warehouses in Southeast Asian countries in order to skirt existing duties on Chinese imports. China exports to SE Asia reached record high earlier this year at same time as exports to US fell. Trump's tariffs on Southeast Asia nations and threat of transshipment duties seen denting economic rationale for Chinese companies to invest in region, risking economic consequences for Southeast Asian economies and regional supply chains (NY Times).

  • Notable Gainers:

    • +12.1% 4768.JP (OTSUKA CORP): reports Q2 earnings with revenue and operating profit ahead of FactSet estimates

    • +5.1% 7974.JP (Nintendo): reports Q1 results; revenue and operating income ahead of FactSet estimates

    • +3.9% 028300.KS (HLB Co.): withdraws merger with HLB Life Science

    • +2.0% 000270.KS (Kia Corp.): reports July global sales 262,705 units vs year-ago 261,798 units

  • Notable Decliners:

    • -15.6% 1515.HK (China Resources Medical Holdings): guides H1 net income attributable (60%)-(55%) ex-items vs prior year's CNY433.9M

    • -5.2% 8.HK (PCCW Ltd): reports H1 net income attributable (HK$445M) vs year-ago (HK$462M)

    • -5.1% 6762.JP (TDK): reports Q1 results; revenue roughly in line with StreetAccount estimates

    • -4.2% 9433.JP (KDDI Corp): reports Q1 earnings; revenue, operating profit below StreetAccount estimates

    • -0.8% TU.TB (Thai Union Group Public): Mitsubishi Corporation intends to acquire 532.3M additional shares of Thai Union Group Public at THB12.50/share

• Data:

  • Economic:

    • Australia July

      • MI Inflation Gauge m/m +0.9% versus +0.1% in prior month

  • Markets:

    • Nikkei: (508.90) or (1.25%) to 40290.70

    • Hang Seng: 225.64 or +0.92% to 24733.45

    • Shanghai Composite: 23.36 or +0.66% to 3583.31

    • Shenzhen Composite: 17.07 or +0.78% to 2192.56

    • ASX200: 1.70 or +0.02% to 8663.70

    • KOSPI: 28.34 or +0.91% to 3147.75

  • Currencies:

    • $-¥: +0.56 or +0.38% to 147.9700

    • $-KRW: (4.69) or (0.34%) to 1384.3400

    • A$-$: +0.00 or +0.02% to 0.6472

    • $-INR: +0.32 or +0.37% to 87.5951

    • $-CNY: (0.04) or (0.50%) to 7.1755