[Eng] 2024/8/30- CSOP Regional Market Report

Federal Reserve Chair Jerome Powell on Friday offered an explicit endorsement of an imminent policy easing, saying further cooling in the job market would be unwelcome and expressing confidence that inflation was within reach of the U.S. central bank's 2% target. "The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks." Powell said in a highly anticipated speech to the Kansas City Fed's annual economic conference in Jackson Hole, Wyoming.

As expectations of a U.S. interest rate cut grow, investors have started to turn to high-growth Southeast Asia in search of markets positioned to benefit from tamed inflation.

Southeast Asian stock markets have soared to new highs since mid-August, with Indonesia's Jakarta Composite Index touching a record this past Wednesday. Malaysia's Kuala Lumpur Composite Index on Tuesday touched its highest since December 2020.

The rate gap between the U.S. and Southeast Asian nations has narrowed, with the region's currencies strengthening against the dollar. The Malaysian ringgit traded at a 16-month high against the greenback earlier this month.

Southeast Asia’s efforts to spur the adoption and local manufacturing of electric vehicles is seeing early signs of success. According to Bloomberg, passenger EV sales more than tripled in 2023 and many major Chinese EV makers now have a manufacturing facility in the region, with more planning to follow soon.

Japanese and South Korean stocks turned slightly higher after earlier losses, with mild gains in Australia. Hong Kong futures pointed to a weak opening, while contracts for US peers were steady after some of the world’s largest tech names pushed US stocks lower.

Jen believed that Chinese firms may have amassed more than $2 trillion since the pandemic in offshore investments, parked in assets that pay higher rates than yuan- denominated ones, according to Jen. When the Federal Reserve lowers borrowing costs, the appeal of dollar assets will erode and potentially spur a “conservative” $1 trillion of flows back home as China’s rate discount with the US narrows.

Hang Seng Indexes Company said that as of August 16, 2024, the amount of stock repurchases by Hong Kong listed companies during the year reached HK$164.8 billion, exceeding the total repurchase amount of Hong Kong stocks in 2023 by 29.8%, setting a record high.

The amount of Hong Kong stock buybacks in 2023 was HK$126 billion, a year-on-year increase of 20.1%, reaching a record high. The first eight months of 2024 set new high again, and are characterized by: 1) big blue chips being the main force in stock buybacks; 2) more new joiner this year.

8 companies in the Hang Seng TECH Index constituent stocks are engaged in repurchases, all of which are active repurchases, with a repurchase weight of 37%. The "active repurchase" here refers to companies whose repurchase amount from 2024 to the present exceeds that of the whole of 2023.

On Thursday afternoon, both the CNY and CNH rose above 7.10 against the US dollar, with an intraday increase of more than 300 points. The CNY hit its highest level since December 29 last year. Some analysts said that considering that the People's Bank of China may take measures to deal with the sharp fluctuations in the RMB, it is expected to be under pressure when it rises to the 7-7.05 range.

With stronger signals coming from the Bank of Japan and Federal Reserve on monetary policy, the yen has gained 3.5% against the dollar since the end of July, with some analysts now forecasting it to hit 135 by the end of the year.

That’s beyond the average assumption of 144.77 indicated in the BOJ’s latest quarterly Tankan poll of more than 9,000 enterprises. It’s also stronger than the assumptions of large exporters such as Toyota Motor Corp. and Honda Motor Co.

Analysts have estimated that every 1-yen rise against the dollar will lead to a 0.4%-0.6% drop in profits of Japanese firms.

The gap between the Nikkei’s intraday high and low during this month increased to 7,625 yen after the gauge tumbled as much as 13% on Aug. 5 in a broad selloff. That’s the biggest difference since August 1990, when the stock market was in the midst of a sharp downturn after the bubble economy burst.

While the magnitude of the gap for the two periods may look similar, volatility quickly subsided this time around, suggesting the outlook may be different.

Consumer prices excluding fresh food rose 2.4% in the capital, an acceleration from 2.2% growth in July, the Ministry of Internal Affairs reported Friday. The result exceeded a consensus estimate of 2.2%. Tokyo’s figures are leading indicators of the national data due in September.

Volkswagen AG’s Chinese partner is in the initial stages of selecting a site in the European Union as part of its future plan to localize production, Chief Executive Officer He Xiaopeng said in an interview with Bloomberg in its headquarters in Guangzhou, China, on Thursday.

The company expects to build capacity in areas with “relatively low labor risks,” He said, adding that Xpeng also plans to set up a large-scale data center in Europe as efficient software collection becomes paramount for cars’ intelligent driving features.

– Morgan Stanley expects JD.com's new buyback plan to support its stock price.

Net profit in 2Q was RMB11.352 billion, surging 142.1% YoY, while non-IFRS Adjusted EBITDA hiked 95.2% YoY to RMB14.997 billion. Adjusted net profit increased by 77.6% to RMB13.606 billion, higher than the upper end of the forecasted range of RMB10.14 billion to RMB12.575 billion by the 6 brokers as summarised by AAStocks.

In 2Q, MEITUAN's revenue lifted 21% YoY to RMB82.251 billion, also exceeding the forecasts of 8 brokers, which ranged from RMB79.92 billion to RMB80.898 billion.

In 1H24, MEITUAN recorded revenue of RMB155.527 billion, lifting 22.9% YoY. Net profit soared 107.8% YoY to RMB16.72 billion, with an EPS of RMB2.7. For the six months ended 30 June 2024 and up to now, MEITUAN has repurchased a total of approximately 222 million Class B shares on the Stock Exchange, involving a capital of RMB23.326 billion.

NetEase has cut all but a handful of jobs at its Ouka studio in Tokyo, according to people familiar with the matter. It intends to shut the Shibuya outfit, which had opened with much fanfare in 2020 and gone on to hire veterans from big names such as Capcom Co. and Bandai Namco Holdings Inc.

NetEase’s far larger rival, Tencent, is also reconsidering the pace and scale of investments in the country. It’s already backed off from at least several funding commitments for new games, the people said.

South Korea's Samsung SDI (005930.KP) said on Wednesday it has completed an agreement with General Motors to build a joint electric vehicle (EV) battery factory in the U.S. state of Indiana. Factory in Indiana to receive $3.5bn investment, start mass production in 2027.

SK Hynix (000660.KP) says it developed the industry’s first 16Gb DDR5 built using its 1c node, the sixth generation of the 10nm process. To be ready for mass production of the 1c DDR5 within the year to start volume shipment next year. -20240829

SAMSUNG (005930.KP) is said to eye Nokia assets to help grow ran business

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