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StreetAccount Summary - Asian Market Recap: Nikkei (1.03%), Hang Seng +0.12%, Shanghai Composite +0.16% as of 03:10 ET

Dec 18 ,2025

• Synopsis:

  • Asia equities ended mostly lower Thursday. Some sharp losses in Shenzhen to reverse yesterday's surge and the CSI 300 ended lower too but the Shanghai Composite and Hang Seng closed slightly higher as banks rallied. Losses in Japan, South Korea, Taiwan and Singapore. Australia and India flat. DJIA futures lower but Nasdaq higher, Europe flat in early trading. US dollar unchanged, yen weakening slightly, other currencies quiet. Treasuries and JGBs mixed. Crude oil contracts higher, precious metals down, base metals mixed. Cryptocurrencies under some pressure.

  • Asia equities partially reversed Wednesday's gains to end mostly lower in a quiet session with only the US inflation data and the BOJ decision on interest rates left as major catalysts for the year. A pullback in technology shares to follow through from Wall Street's declines overnight responsible for the negative session which saw most AI-related stocks tilt to the downside but losses were limited thanks to Micron's positive profit warning after hours. That said, gains to the upside also capped by Nasdaq futures that point to only a modest gain at the open for now. The yen weakened ahead of tomorrow's rate decision in which markets fully expect a 25 bps hike, but investors concentrating on global central bank trends which indicate a potential for rate hikes next year, ex the US and UK.

  • In regional developments, New Zealand's Q3 GDP growth rebounded by slightly more than expected. JGB 10Y yield rose again to another 18-year higher ahead of the BOJ interest rate decision with almost all economists forecasting a 25 bps hike. Taiwan's central bank expected to keep interest rate unchanged later Thursday.

  • Honda Motors (7267.JP) said it has halted production in several plants in Japan and China as a chip shortage continues. China International Capital (3908.HK) launched a share swap merger with Dongxing Securities (601198.CH) and Cinda Securities (601059.IN). Woodside Energy (WDS.AU) CEO Meg O'Neill resigned to become the new CEO at BP. LG Energy Solutions (373220.KS) confirmed Ford had cancelled a KRW 9.6T ($6.5B) contract to supply EV batteries after policy shifts, EV demand forecasts; shares down sharply.

• Digest:

  • BOJ expected to raise rates and maintain normalization bias:

    • In the latest BOJ preview, Nikkei reported BOJ plans to retain a rate hike bias from 2026 onwards. Board members expected to propose a 25 bp rate hike with majority support. On forward guidance, BOJ said to be mindful of preventing the spread of perceptions the rate hike cycle is over. Markets now focused on how Governor Ueda at the post-MPM press conference describes the normalization stance in 2026 and beyond. Article noted BOJ considers financial conditions to be accommodative given sharply negative real rates, which has kept yen under pressure to leave the trend well-established in the 155 area versus dollar, in turn inviting inflation risk via import prices. Furthermore, most BOJ officials internally view a policy rate of 0.75% as accommodative as real rates would still be negative and nominal levels remain low relative to other countries. Political resistance appears to be low given Prime Minister Takaichi's recent remarks that specific monetary policy steps should be left to BOJ. A source indicated such deference was echoed in government circles, posing a low chance of any open opposition to a rate hike this week or retention of a hawkish stance. Key market attention on neutral rates, especially whether BOJ might raise the lower bound of the previously estimated range of 1%-2.5% which would open up space for more rate hikes. However, most BOJ officials said to be skeptical MPC will offer such substantive policy guidance based on the neutral rate and instead will assess the proximity to neutral level based on holistic analysis including economic activity and lending growth (ie largely status quo).

  • New Zealand economic growth rebounds:

    • New Zealand Q3 GDP growth rebounded to 1.1% q/q from Q2's revised 1.0% contraction, topping consensus for 0.9% growth and marking three-year high. Saw yearly growth rise to an in-line 1.3% from 0.6% contraction in Q2. Capex and government spending the main contributors, offsetting slowdown in household consumption and negligible contribution from net exports. By production, manufacturing, construction and services sectors returned to growth. No surprises from the data with economists having predicted New Zealand would enter cyclical upswing as past interest rate cuts exert their effects. Excess slack in New Zealand's economy seen keeping lid on pricing pressures (inflation projected moderate to 2% midpoint) though markets have nonetheless moved to price in rate hikes late 2026. RBNZ Governor Breman this week sought to push back against rate hike narrative by stating financial conditions had tightened beyond what was implied by November's OCR projections. Markets have pared 2026 rate hike expectations in wake of her remarks with policy-sensitive 2Y yield down ~10 bp over past week.

  • After Japan's FY25 extra budget was enacted, FY26 main budget poised for another record:

    • Japan budget season continues. Nikkei reported lawmaker attention turning to the FY26 general budget after having enacted the FY25 supplementary budget that was the largest since the Covid pandemic. Consistent with prior leaks, FY26 general budget expected to total more than JPY120T ($771B), surpassing the previous record of this year's JPY115.2T. Given coalition's lack of majority control, budget will incorporate opposition demands on spending items that augurs for further upside risk. Overall trajectory reinforcing rising JGB yields reflecting concerns about deterioration in fiscal discipline. Article recalled the FY25 stimulus package expenditure was upsized from MOF's initial draft for JPY14T to JPY17.7T. Prime Minister Takaichi will maintain a proactive stance for the FY26 budget, remarking at a Council for Economic and Fiscal Policy meeting on 27-Nov that was imperative to properly allocate necessary funding in the general budget. Cited problems with the normalization of addons via extra budgets. Government also amended its process for assessing fiscal discipline, doing away with annual reviews of the primary balance in favor of a multi-year frequency. As of the summer, bottom-up budget requests for FY26 totaled JPY122.45T, larger than FY25 JPY117.61T to mark a new record.

  • RBI Governor Malhotra says rates to remain low for long:

    • In an FT interview published Wednesday, RBI Governor Sanjay Malhotra said he expects rates to remain low for a "long period" amid robust economic growth that could soon be boosted by trade deals with US and Europe. Touted rate cuts during his tenure helped engineer a 'Goldilocks' phase of brisk growth with low inflation. Article noted headline CPI inflation was just 0.71% in November, well below the 2% lower bound of the RBI's target range, albeit central bank projects acceleration to 2.9% in Q1. GDP estimates look for growth to slow to 6.7% in Q2, compared to a hotter than expected 8.2% in Q3. With a substantial overshoot vs RBI's forecast of 7%, surprise gap underscored sizable margin for error in India data. Malhotra also said forward estimate does not account for potential trade agreements under negotiation, suggesting a US deal could add as much as 0.5 ppt. EU deal would also increase growth, though did not specify. US pact will probably be signed before year-end while India and EU hope to seal a deal in weeks. Initial concerns about a fallout from higher US tariffs were tempered given India's narrower export profile compared to other Asian economies. FX policy remains under some scrutiny though market perceptions RBI unde Malhotra has taken a less interventionist approach was affirmed by IMF's assessment that RBI is now allowing more freedom albeit "crawl-like." Still, Malhotra insisted he had not deviated from previous RBI policy, reiterating they did not target a specific level and only sold dollars to curb excess volatility.

  • Notable Gainers:

    • +4.6% 4849.JP (en Inc.): Kakaku.com to acquire 85.1% stake in en Inc.'s engage business spinoff

    • +3.7% 601995.CH (China International Capital): launches share swap merger with Dongxing Securities, Cinda Securities at CNY36.91/share

    • +2.6% 9501.JP (Tokyo Electric Power Co. Holdings): reportedly starts preparing to restart Kashiwazaki-Kariwa Nuclear Power Plant Unit 6 around 20-Jan

    • +1.7% 3593.JP (Hogy Medical): Carlyle Group to acquire Hogy Medical through tender offer at ¥6,700/share

    • +1.6% 9201.JP (Japan Airlines): reports November traffic +8.3% y/y

  • Notable Decliners:

    • -8.9% 373220.KS (LG Energy Solution): Ford terminates KRW9.603T ($6.49B) EV battery supply contract with the company

    • -8.2% 000150.KS (Doosan): named preferred bidder for the acquisition of SK Siltron

    • -5.7% 2502.JP (Asahi Group Holdings): Diageo to sell to Asahi its 65% shareholding in EABL, and its shareholding in Kenyan spirits business UDVK; estimated net proceeds after tax and transaction costs of $2.3B (¥357.54B)

    • -4.1% 20.HK (SenseTime Group): launches HK$3.15B placement at HK$1.80/share

    • -2.8% 006260.KS (LS Corp): subsidiary LS MnM to acquire 78% stake in PT Teluk Metal Industry for KRW265.34B in cash

    • -0.4% 1876.HK (Budweiser Brewing Co. APAC): CFO Ignacio Lares to step down, effective 1-Apr

• Data:

  • Economic:

    • New Zealand Q3

      • GDP +1.1% q/q vs consensus +0.9% and revised (1.0%) in Q2

        • GDP +1.3% y/y vs consensus +1.3% and (0.6%) in Q2

  • Markets:

    • Nikkei: (510.78) or (1.03%) to 49001.50

    • Hang Seng: 29.35 or +0.12% to 25498.13

    • Shanghai Composite: 6.09 or +0.16% to 3876.37

    • Shenzhen Composite: (17.29) or (0.70%) to 2440.86

    • ASX200: 3.00 or +0.03% to 8588.20

    • KOSPI: (61.90) or (1.53%) to 3994.51

    • SENSEX: 99.38 or +0.12% to 84659.02

  • Currencies:

    • $-¥: +0.16 or +0.10% to 155.8630

    • $-KRW: +1.13 or +0.08% to 1476.4830

    • A$-$: +0.00 or +0.06% to 0.6608

    • $-INR: (0.18) or (0.20%) to 90.2413

    • $-CNY: (0.00) or (0.04%) to 7.0410