ASIA: Hong Kong Listed Equities Rally, Mainland Equities Struggle
Chinese and Hong Kong equities saw mixed moves today, with AI-related stocks continuing their rally, while pressure mounted on consumer and healthcare sectors. DeepSeek's AI-driven surge remains a key bullish driver, with Morgan Stanley, JPMorgan, and UBS expressing optimism that the rally is far from over. The MSCI China Index has now gained 15% from its January low, supported by increased global investor interest in the nation’s tech sector.
- Medical equipment stocks surged after Citigroup turned constructive on the sector, citing market share gains from foreign brands and long-term fundamentals. MicroPort MedBot (+8.5%), MicroPort Scientific (+5.7%), and Inkon Life (+7.7%) led the advance, with Citi highlighting potential stimulus measures at next month’s Two Sessions as a further catalyst.
- Meituan tumbled as much as 6.1% after JD.com announced it would waive annual commissions for new restaurant partners, intensifying competition in the food delivery sector. JD.com shares rose 2%, while Alibaba share surged almost 7%. The HStech Index tracked Alibaba higher, however has since given back about half of the mornings gains to trade 1.30% higher at the break.
- Key equity benchmarks: HSI is +1.56%, HS Property Index +2.15%, HS China Enterprise Index +1.50% while China Mainland equities underperform with the CSI 300 -0.10%.
- Overall, sentiment remains strong for AI and tech stocks, while consumer and platform businesses face increasing pressure from competition and regulatory concerns.
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GBP: Makes Fresh Lows In Asia Pac, Worst G10 Performer
The GBP remains on the backfoot, continuing to display volatility/weakness in the Asia Pac time zone. We were last 1.2145/50, off around 0.50%. This is fresh lows in the pair back to 2023.
- There doesn't appear to be a fresh catalyst for the move so far today, other than carry over weakness from the past week or so.
- In terms of downside targets the MNI technical team note the following:
- SUP 2: 1.2138 Low Nov 2 ‘23
SUP 3: 1.2087 0.764 proj of the Sep 26 - Nov 22 - Dec 6 price swing
SUP 4: 1.2037 Low Oct 4 ‘23 and a key support
CHINA DATA: Exports End 2024 Firmer, But Uncertain 2025 Outlook
China Dec trade figures were better than expected. Exports rose 10.7%y/y against a 7.5% forecast 6.7% prior. Since a trough in March last year, exports have mostly been on a modestly improving trend. 2025 remains much more uncertain though, given the returning Trump administration to the White House Imports also beat expectations, up 1.0%y/y (versus -1.0% forecast and -3.9% prior. The trade surplus was near $105bn, against a $100bn forecast.
- On the export side, shipments to the US rose 15.7%y/y, up from 7.3% in Nov. In levels terms, exports to the US were the highest since Q3 2022. Exports to Taiwan also bounced to 14.2% and were quite firm ASEAN economies (+19.2%) and the EU (+8.8%y/y).
- The trade surplus with the US eased a touch to $33.50bn, but is still elevated by recent standards.
- On the import side, commodity import volumes were mixed. Oil and coal were both down in Dec from a volume standpoint, coal was still a healthy +14.4%y/y, but oil was off 1.9%. Iron ore import volumes surged to over 112mln tones (up over 10% in m/m terms. Natural Gas volumes were also stronger in m/m terms and up close to 10%y/y.
Fig 1: China Export & Import Trade Trends Y/Y
Source: MNI - Market News/Bloomberg
BONDS: NZGBS: Heavy Session But Outperformance Vs. ACGBs
NZGBs closed at session cheaps, with benchmark yields 7bps higher. The NZGB 10-year did, however, outperform ACGBs, with the NZ-AU yield differential 6bps narrower.
- There have been no cash dealings in US tsys in today’s Asia-Pac session with Japan out for a holiday. TYH5 is, however, weaker at 107-07, -0-05+ from NY closing levels.
- Outside of the previously outlined building approvals and filled jobs data, there hasn't been much by way of domestic drivers to flag.
- Swap rates closed 7-8bps higher, with the 2s10s curve flatter.
- RBNZ dated OIS pricing closed 2-7bps firmer across meetings, with October leading. 49bps of easing is priced for February, with a cumulative 126bps by November 2025.
- Tomorrow, the local calendar will see the results of the NZIER Business Opinion Survey.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 3.00% Apr-29 bond, NZ$175mn of the 3.50% Apr-33 bond and NZ$75mn of the 1.75% May-41 bond.
