ASIA STOCKS: Foreign Investors Continue To Offload Asian Equities

USD/JPY is just up from session lows, last near 153.35/40, around 0.65% stronger in yen terms. Earlier lows were at 153.17. Current levels are very close to Dec 18 lows from last year. A clean break sub 153.30 could see further downside targeted, with 152.55, the 61.8% retracement of the Dec 3 - Jan 10 bull leg, potentially in focus. 

• Outside of the previously mentioned labor earnings data beat, and encouraging words from the Economic Minister on positive inflation trends, the broader risk mood has also turned more supportive for yen.
• China aggregate equity indices couldn't sustain early gains, after returning from the LNY break. HK markets are also weaker, the HSI off over 1%. Trade tensions with the US following tariff announcements, along with poorer PMI data is a headwind. Headlines have also crossed that the US is halting inbound parcels from China & Hong Kong, adding uncertainty to the broader US-China outlook.
• Yen is up around the AUD and NZD, although these currencies are unchanged versus the USD at this stage.
• We continue to see downside in US-JP yield differentials, supporting the firmer yen backdrop, see the chart below.
• Yen volumes have dominated the FX options space so far today, with around $3.86bn in USD/JPY transactions of the total $7.7bn in transactions

Fig 1: USD/JPY Lower As US-JP Yield Differentials Shift Lower 

Source: MNI - Market News/Bloomberg  

The AOFM said the issue by syndication of the new 4.25% 21 March 2036 Treasury Bond was priced at a yield to maturity of 4.46%. 

• The issue size is A$15.0 billion in face value terms, with a total of A$83.4 billion of bids at the final clearing price.
• Settlement of the issue will occur on 11 February 2025.
• Barrenjoey Markets Pty Ltd*; Commonwealth Bank of Australia; National Australia Bank Limited; and UBS AG, Australia Branch were Joint-Lead Managers for the issue.
• The AOFM will be mindful of the performance of the bond when considering the timing of future issuance.

As China returns from LNY markets are trading mixed. The CSI 300 is trading 0.20% lower, while small-cap indices are performing better with the CSI 1000 & 2000 trading about 1% higher. Hong Kong listed equities are performing worse with the HSI down 1.20%, HS Tech Index is -1.60%, while the Mainland Property Index trade -1.30%.

• Chinese Travel & Tourism: Airline and travel stocks declined, with China Southern and Air China down ~4%, and Trip.com falling ~5%. However, regional tourism data was positive—Guangdong saw 80m visitors with ¥74b in tourism revenue (+7.5% YoY), Shanghai had 17.8m tourists (+6.1% YoY), and Beijing's retail sales from restaurants and stores hit ¥8.1b (+4.2% YoY).
• E-commerce & Logistics Hit by US Postal Suspension: Alibaba fell 2.1%, JD.com dropped 5.1%, and SF Holding declined as the US halted inbound parcels from China & Hong Kong, adding uncertainty to the sector.
• Sector-Specific Moves: Tungsten stocks gained 3%+ after China imposed export controls, while genetic sequencing firms rose after Beijing blacklisted US company Illumina. AI-related stocks surged, with Iflytek up 8.5%, TRS Information rising 20%, and Beijing Kingsoft up 18%.
• Hong Kong Selling Pressure: The Hang Seng China Index fell 1.8%, with HK$2b ($257m) in mainland investor selling. Maoyan Entertainment dropped 14% despite record Chinese New Year box office numbers, while Enlight Media surged 20%.