ASIA: Hong Kong Listed Equities Rally, Mainland Equities Struggle

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 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 

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.