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StreetAccount Summary - Asian Market Recap: Nikkei Closed, Hang Seng (0.87%), Shanghai Composite +0.09% as of 03:10 ET

Dec 31 ,2026

• Synopsis:

  • Asia equities ended Wednesday in a very quiet session with much of the region already on holiday or taking half days for the new year. There were some small gains in Shanghai, Mumbai and Taipei but falls in Shenzhen, Hong Kong and Singapore. South Korea and Japan markets were closed. US futures lower, Europe slightly down in early trades. US dollar higher, yuan consolidated below 7.0 per dollar, quiet elsewhere. Treasuries and JGBs unchanged. Crude oil lower, gold down, while platinum and silver down very sharply on the CME's margin increase. Base metals down.

  • Asia equities ended the year quietly as expected with few catalysts around before the new year's holidays. Hong Kong fell as its large-cap growth stocks underperformed again but still rose more than 27% for the full year; Shanghai closed with a 23% gain and Shenzhen over 35% to see out the country's best equity return in eight years. Economic data today was positive as the official PMI returned to expansion for the first month in eight while the private RatingDog PMI expanded amid stronger output and higher order books, largely driven by domestic sales as new export orders contracted further. Elsewhere, South Korea inflation eased but the tick lower is unlikely to sway the BOK from its hold stance.

  • Other Asia markets closed out the year with big gains. Taiwan's Taiex added 31%, Singapore's STI 30% to end on an almost perfect high, and Australia gained 15% while New Zealand relatively underperformed with a 7% gain. In Southeast Asia, Indonesia's JSX gained 17%, Malaysia's KLCI 13% and Vietnam's HNX 6.7%. Thailand's SET lost 2.6% and the Philippines PSE almost 9%.

  • In company news Wednesday, Zijin Gold (2259.HK) guided FY net profit above consensus forecasts. Celltrion (068270.KS) said it plans to establish a supply base for contract manufacturing for global pharma companies using its acquired Imclone facilities.

• Digest:

  • China factory activity returns to growth in December, ending eight-month contraction streak:

    • China official manufacturing PMI was 50.1 in December to nine-month high, beating consensus and November's 49.2. Marked first reading in expansionary territory since March. Underlying components showed production and new orders swinging to expansion. Narrower declines in new export orders and raw material inventory. Employment fell while supplier delivery time was faster. Pricing metrics saw slower growth in input prices while output prices showed smaller declines. Non-manufacturing PMI rose to 50.2 from 49.5 and above consensus 49.8. Construction rose back to expansion after four months in contraction. Services narrowed declines to 49.7 from 49.5, which saw strong activities in media and capital market services and weak ones in retail and F&B. New orders declined at a narrower pace. Input costs saw softer growth while output prices saw bigger declines amid continued margin compression. Composite PMI rose to 50.7 from 49.7 in prior month. Separate RatingDog manufacturing PMI rose to 50.1 from 49.9 in prior month, beating consensus 49.8. Production returned to growth despite slight fall in new export sales.

  • South Korea CPI falls but BOK unlikely to be moved from Hold path:

    • South Korea December consumer inflation fell to 2.3% y/y from prior 2.4% and in line with consensus expectations, but stayed above BOK 2.0% target rate for fourth consecutive month (MoDS). On monthly basis, CPI rose 0.3% caused by surge in import prices amid weak won. Core inflation rose 2.0% y/y; for FY2025 inflation fell to 2.1%, lowest level in five years. Ministry said 6.1% rise in petroleum products largely behind December's print with diesel prices up 10.8%, gasoline up 5.7%, reflecting weak won, while agricultural food prices rose 4.1%. Utilities, transport, accommodation were among sectors with below headline price increases while alcohol and tobacco and healthcare saw mild deflation. Analysts said although tick lower will be welcomed by BOK, it is unlikely to renew easing path next month as previous warnings over financial imbalances caused by soaring house prices, large-scale household debt still hold (Bloomberg).

  • China allocates $9B for first tranche of 2026 consumer goods trade-in program:

    • According to statement on Tuesday, China's NDRC said CNY62.5B ($8.9B) will be earmarked for first tranche of consumer goods trade-in program next year, funded by issuance of ultra-long-term special treasury bonds (Bloomberg, Reuters). Implementation will be paced accordingly to meet consumption demands during peak seasons such as New Year's Day and the Spring Festival. Policy will feature rebates of 15% across six categories of major home appliances and next year will be extended to electronic items such as smartphones. Subsidies will also apply to NEVs, though adjusted to incentivize purchases of higher priced models (Bloomberg). Stimulating domestic demand will be top policy target in 2026 with government seen leaning more on fiscal measures to boost consumption, including both supply- and demand-side policies. Another extension of trade-in subsidy program was expected though authorities have yet to disclose total size of program in 2026 after setting aside CNY300B for 2025. Retail sales growth slowed to record low outside of pandemic in November, reflecting in part reversal of government trade-in program.

  • China mandates chipmakers use more than 50% domestic equipment for new capacity:

    • Reuters sources said China chipmakers seeking state approval to build or expand plants will be required to ensure at least 50% of equipment will be domestically made, as Beijing continues efforts to promote self-sufficiency. US restrictions on exports of chipmaking equipment in 2023 had already forced Chinese fabs to source domestic alternatives, though 50% rule will also apply where foreign-made equipment is available. Flexibility will be shown for advanced chip production lines where there is no domestic equipment available. Naura Technology (002371.CH) is China's biggest chip equipment company, currently testing its etching tools on SMIC's (981.HK) 7nm production line. Smaller firm Advanced Micro-Fabrication Equipment (688012.CH) is also filling in space left by foreign rivals such as Lam Research (LRCX) and Tokyo Electron (8035.JP). China's tech self-sufficiency drive expected to be multi-year theme as Beijing directs subsidies and funding for development of locally produced AI chips while prodding firms to source domestically and reduce reliance on foreign suppliers like Nvidia (NVDA).

  • Notable Gainers:

    • +9.7% 1709.HK (DL Holdings Group): receives SFC conditional approval to provide virtual asset dealing services

    • +4.8% 500228.IN (JSW Steel): India steel sector trading higher after government imposes three-year import tariff on certain steel products

    • +1.4% 2259.HK (Zijin Gold International): guides FY net income attributable $1.5-1.6B vs FactSet $1.14B

    • +0.0% 002371.CH (NAURA Technology Group): China mandates chipmakers use more than 50% domestic equipment for new capacity

  • Notable Decliners:

    • +0.0% 998.HK (China CITIC Bank): president Lu Wei resigns due to work arrangements, effective immediately

• Data:

  • Economic:

    • China December

      • Official manufacturing PMI 50.1 vs consensus 49.2 and 49.2 in prior month

        • Non-manufacturing PMI 50.2 vs consensus 49.8 and 49.5 in prior month

        • Composite PMI 50.7 vs 49.7 in prior month

      • RatingDog Manufacturing PMI 50.1 vs consensus 49.8 and 49.9 in prior month

    • South Korea

      • December CPI +2.3% y/y vs consensus +2.3% and +2.4% in prior month

        • CPI ex-food & energy +2.0% vs +2.0% in prior month

  • Markets:

    • Nikkei: Closed

    • Hang Seng: (224.06) or (0.87%) to 25630.54

    • Shanghai Composite: 3.72 or +0.09% to 3968.84

    • Shenzhen Composite: (7.73) or (0.30%) to 2530.96

    • ASX200: (2.80) or (0.03%) to 8714.30

    • KOSPI: Closed

    • SENSEX: 636.60 or +0.75% to 85311.68

  • Currencies:

    • $-¥: +0.14 or +0.09% to 156.5570

    • $-KRW: +3.57 or +0.25% to 1441.9490

    • A$-$: (0.00) or (0.14%) to 0.6686

    • $-INR: +0.03 or +0.03% to 89.8599

    • $-CNY: (0.01) or (0.12%) to 6.9883