EM ASIA CREDIT: TSMC (TAISEM, Aa3/AA-/NR) not immune from tariifs

Asian stocks rebounded after US Commerce Secretary Howard Lutnick suggested the Trump administration may ease tariffs, which had triggered a global market selloff. Hong Kong led gains as China reaffirmed its 5% GDP growth target at the National People’s Congress, boosting sentiment. Japan’s equities fluctuated as investors awaited further details on Trump’s trade policies. South Korea announced a major ₩50t fund to support high-tech industries, providing some relief after recent equity outflows. Meanwhile, New Zealand’s market declined following RBNZ Governor Adrian Orr’s resignation, and Australia’s ASX 200 dropped 1% despite Q4 GDP meeting expectations.

• Hong Kong’s Hang Seng Index surged 2.30% as China emphasized domestic demand as the primary economic driver for 2025 and committed to supporting AI and other growth sectors. China also set its GDP growth target at ~5% and increased its budget deficit to the highest level in 30 years to counter economic headwinds. The CSI 300 is 0.10% higher.
• Japan’s Topix & Nikkei are both trading flat as investors reacted cautiously to Trump’s potential tariff revisions. Carmakers rebounded after Tuesday’s losses, but financial stocks lagged. BOJ Deputy Governor Shinichi Uchida’s upcoming comments on monetary policy and yen movement remain in focus.
• South Korea detailed a ₩50t ($37b) special fund to boost high-tech industries like semiconductors, batteries, and AI. The government-backed fund will provide low-interest loans and equity investment, requiring parliamentary approval in March. The move comes amid sustained foreign investor outflows. The KOSPI is 0.50% higher, Samsung is a drag the Index, trading 0.30% lower.
• Australia's ASX 200 is 1.20% lower as Q4 GDP grew 0.6%, in line with expectations, reinforcing the RBA’s cautious stance on rate cuts. Weak risk sentiment and global trade concerns weighed on the market. The NZX 50 index fell 0.9% erasing early gains following RBNZ Governor Adrian Orr’s surprise resignation. Investors are now watching for signals on future monetary policy direction.

RBA-dated OIS pricing is 1-6bps firmer across meetings today. 

• Nevertheless, pricing remains mixed compared to February’s pre-RBA Decision levels—meetings through May are 2-4bps firmer, while those beyond are flat to 10bps softer.
• Today, Q4 GDP printed exactly in line with consensus at +0.6% q/q & 1.3% y/y up from 0.3% & 0.8% in Q3, but above the RBA’s February forecast of 1.1% y/y.
• A 25bp rate cut in April is given a 10% probability, with a cumulative 58 bps of easing priced by year-end (based on an effective cash rate of 4.09%). 

Figure 1: RBA-Dated OIS – Today Vs. Pre-RBA Levels

Source: MNI – Market News / Bloomberg

ACGBs (YM -8.0 & XM -12.0) are sharply cheaper and near Sydney session lows after today’s release of Q4 GDP.

• Q4 GDP printed exactly in line with consensus at +0.6% q/q & 1.3% y/y up from 0.3% & 0.8% in Q3, but above the RBA’s February forecast of 1.1% y/y. It is in line with the quarterly average for 2018-19. Growth was supported by private, public and overseas demand with domestic demand adding 0.5pp and net exports 0.2pp with the statistical discrepancy detracting 0.15pp. The broad-based pickup in Q4 growth is a good sign that the economy is recovering but monthly data will be watched closely to see if it continues in Q1.
• The ABS notes that GDP/capita rose 0.1% q/q, the first rise in eight quarters.
• Cash US tsys have twist-steepened, with yields 2bps lower to 1bp higher, in today’s Asia-Pac session after yesterday’s heavy session.
• Cash ACGBs are 8-12bps cheaper with the AU-US 10-year yield differential at +13bps.
• Swap rates are 7-11bps higher, with the 3s10s curve steeper.
• The bills strip has bear-steepened, with pricing -1 to -8.