Things to know before Trading Asia on Monday - shortened trading for many but still an FOMC meeting and who knows what from Trump!

Expect light trading in Asia due the Lunar New Year

A short trading week in Asia; with markets impacted by the Lunar New Year; which means trading volumes are likely to be light with many investors taking the whole week off.

Japan - open all week
S Korea - closed Tuesday and Wednesday
Taiwan - closed all week; re-opens Monday 3 February
China - closed Tuesday until it re-opens Monday 3 February
Hong Kong - closed Wednesday until it re-opens Monday 3 February
Macau - closed Wednesday until it re-opens Monday 3 February
Singapore - closed Wednesday and re-opens Friday 31January
Malaysia - closed Wednesday and re-opens Friday 31January
Indonesia - closed Wednesday
Philippines - closed Wednesday
Thailand - open all week
Cambodia - open all week
Myanmar - open all week
India - open all week

Key data point this week will be the FOMC meeting and whilst no rate change is expected the comments and press conference will be closely watched for insights of how the FOMC views Trump’s comments and policies as they impact the US and global economy. The Fed’s dual mandate is Full Employment and low inflation.

We have been wondering what Trump’s policies would mean and most investors have been focused on the tariff aspect that had been hyped during the election and subsequently. It turns out that Trump’s foreign policy, that wasn’t really discussed during the election, looks like having more immediate impact on the world. That could mean further upsets to the already fragile global economy. Interestingly Trump said over the weekend that he might consider rejoining the WHO underlying how unpredictable his style of governing is. He has also said his conversation with Chinese President Xi Jinping last week was friendly and he thought he could reach a trade deal with China; would that mean no tariffs?

From Davos we can see the peace in the Middle East has a real chance. In Ukraine a ceasefire seems more likely and that would lead to a huge reconstruction boom ahead. For finance more de-regulation seems likely which should lead to more M&A. Including more consolidation of the banks themselves. AI remains in focus with adoption and implementation the next expected step. At present the US is ahead of China but needs more government tech friendly policies for that to continue. The energy sector was seeking to digest recent announcements from Trump and how that will impact markets. China’s economic situation and the fact that Trump was delaying tariffs was much discussed but for how long is now the question.

Housekeeping

Next Monday morning I will be on RTHK’s Money Talk with host Andrew Work and Isaac Poole, Chief Investment Officer of Oreana Financial Global. If you want to suggest a topic or listen to the show please click here https://www.rthk.hk/radio/radio3/programme/money_talk

On Thursday afternoon l was on RTHK’s 'The close’ with Xiaolin Chen Head of International at KraneShares and host Nitin Dialdas; we talks about the BoJ’s current course of action, luxury goods and what’s going on with Trump and tariffs. If you want to listen to the programme you can find it here: https://www.rthk.hk/radio/radio3/programme/the_close

For leading independent research, click on http://ERI-C.com it is a great platform where independent research vendors list their research and trading analysis. ERI-C is free to access, you can browse different independent research providers, most offer free trials; so worth a look.

Mark Tinker recently posted the Latest thoughts from Market Thinker - Method in the Madness?
Everything points to a focus on reducing the Twin Deficits - takes a look at some of the Trump’s seemingly random proposals but sees a theme that of making others pay for America’s debt.

FT Weekend and online

Donald Trump in fiery call with Denmark’s prime minister over Greenland
US president insisted, aggressively that he wants to take over Arctic island. Seems that during the phone call he was relentless despite the Danish PM telling him it wasn’t for sale and despite knowing that the Greenlanders want independence.

The worry is that he is willing to over-ride the accepted norms of the free world in order to put himself or the US at the top of the tree. The worry people have is that he will adopt a dictators path and use force rather than the free world’s way of working and co-operating with other countries with mutual respect. The call with Denmark’s PM is not that different to the ultimatums that he present to those at Davos.

A key line is that he said 'We are going to be demanding respect from other nations,”. His went on to say he predecessor had “allowed other nations to take advantage of the US. We can’t allow that to happen any more.”

To my knowledge you cannot demand respect from others; only earn it. Dictators demand but true leaders earn the respect of others. One can’t help but feel that if Trump and his advisers continue on this path there is going to be more strife. It seems that like Xi in China, Trump has decided to try and use the US’s economy to rebalance the world order.

The problem is that if Trump takes this approach with every issue that comes across his desk the world is going to be in trouble.

Wash­ing­ton stokes Panamanian fears of inva­sion
Claims by US pres­id­ent that China con­trols canal revive memor­ies of 1989 occu­pa­tion.

On that note Marco Rubio demands immediate halt to virtually all US foreign aid
Secretary of state freezes contracts around the world, fulfilling executive order from Donald Trump. It highlights a radical change in way the US aid will be viewed in the future.

US securities regulator opens door for Wall Street banks to hold crypto
Securities and Exchange Commission overturns guidance that made it costly to hold digital assets for clients. Expect the crypto rally to continue as the Trump administration goes out of its way to support the sector.

White House presses Fed chair to ease policy
Don­ald Trump has raised the pres­sure on Fed­eral Reserve chair Jay Pow­ell to cut bor­row­ing costs, set­ting up a poten­tial clash between the two men less than a week before the US cent­ral bank meets to set interest rates.

I doubt many people were surprised when Trump commented that he knew more about interest rates that the FOMC and I am sure in his own mind he does. But I also think that Trump is thinking about the impact on his business rather than the fulfilling the dual mandate of the FOMC. Currently Powell and the FOMC fiercely defend their independence and so in the short term policy will continue as before. The real question will be what happened when Trump’s term ends, will the next chair be so committed to independence?

The Big Read The new eco­nomic war
Trump’s fren­etic first week in office was marked by moves to assert Amer­ica’s com­mer­cial suprem­acy. This array of ulti­mat­ums and demands sug­gests he will use the coun­try’s fin­an­cial might as a cudgel.

Key is “He’s weapon­ising everything: trade, tax and energy. I’m wor­ried that fin­ance will get weapon­ised too,” says the head of one of the world’s largest sov­er­eign wealth funds. “Most people are bet­ting that he cares about the stock mar­ket — that’s the only check. That and the fact that he has said he wants to be a peace­maker.”

Chinese AI lab reveals its meth­ods in a chal­lenge to Sil­icon Val­ley’s secrecy
Deep­Seek; a small Chinese arti­fi­cial intel­li­gence lab stunned the world this week by reveal­ing the tech­nical recipe for its cut­ting-edge model, turn­ing its reclus­ive leader into a national hero who has defied US attempts to stop China’s hightech ambi­tions.

'Liang Wen­feng, released its R1 model, explain­ing in a detailed paper how to build a large lan­guage model on a boot­strapped budget that can auto­mat­ic­ally learn and improve itself without human super­vi­sion.’

He has now also attended a meeting of entrepreneurs with Li Qiang (the number 2 in China) as Beijing tells him and others like him to “con­cen­trate efforts to break­through key core tech­no­lo­gies”.

He has built a good team and they are focused on research and willing to share their knowledge within China rather than purely seek commercial gains; rather like DeepMind was originally. They have shown they can achieve world class results with limited access to state of the art chips the question is whether they can continue that as the US restricts access to the most modern tech. I

It also illustrates that US leadership is not guaranteed. The Economist also has an article on the matter too.

The dragon in the mirror Chinese AI is catching up, posing a dilemma for Donald Trump
The success of cheap Chinese models threatens America’s technological lead.

Makes the point that whilst the Chinese models may not be the best in class they are far cheaper to run and operate. Also the fact that the US is limiting China’s access to the latest machines and chips has forced it to explore alternatives and that innovation could mean that it actually will get ahead of the US. Also as two countries seek to dominate AI and encourage other countries to use their AI and tech. That poses more problems to the US than China where open sourcing is more common. The US is currently leading but it cannot afford to rest on its laurels.

Also Marginal revolution. OpenAI’s latest model will change the economics of software
The more reasoning it does, the more computer power it uses

OpenAI struggles to price Microsoft’s stake in cor­por­ate shake-up with few precedents
Chat­GPT maker faces oppos­i­tion from former team mem­ber Musk as it works on plans to split from its non-profit arm

For Equities worth reading US stocks at most expens­ive against bonds since dot­com era
US equit­ies have soared to their most expens­ive level rel­at­ive to gov­ern­ment bonds in a gen­er­a­tion, amid nervous­ness among some investors over high valu­ations of mega­cap tech­no­logy com­pan­ies and other Wall Street stocks.

China’s cent­ral bank pumps in record short-term funds for new year hol­i­day. It has pumped a record amount of short-term funds into the fin­an­cial sys­tem this week in an effort to pre-empt the cash crunch that usu­ally accom­pan­ies the Lunar New Year hol­i­day.

The total cash injec­tion of Rmb2.2tn ($300bn) through the 14-day reserve repo, a short-term liquid­ity tool, comes as mil­lions of res­id­ents pre­pare to travel home, settle tax bills and hand out cash-filled red envel­opes. I think it will be interesting to see if the cash is actually used by the public this year or whether the public remains in ’saving’ mode.

Post the Chinese New Year it will be interesting to see if we get a RRR cut after the Chinese New Year

The Weekly Economist

Trading losses Tariffs will harm America, not induce a manufacturing rebirth
Donald Trump’s pursuit of tariffs will make the world poorer—and America, too

Matters of opinion How (un)popular is China’s Communist Party?
As the economy falters and the social compact frays, Xi Jinping wants to know if the population remains onside.

Looks at how China seeks to track public opinion to check that the social contract is still accepted and that the government still has the mandate to govern. Mentions the Tacitus trap and the Middle Income Trap. But whilst they try to monitor public opinion via online comments the censors are equally quick to delete those that are critical of Beijing; and people censor themselves so that the government can never really know what the public is thinking.

Star signs and tarot cards. It’s a good time to be an astrologer in China
In the face of hardship, the country’s youth are embracing superstition.

With an increasingly clouded outlook the youth in China are looking for any guidance they can get including using divination, spiritualism and superstition. Much of it online; Cece has been downloaded over 15.5m times. Other apps are seeing increased use too. Beijing however is seeking to wean the public off such practices and beliefs; including blocking some phrases from search engines.

I think it reflects the reality that the public’s no longer believes in the party and its promises.

Not as bad as expected The early days of the Trump administration, as viewed from China
A good start, but it could get worse quickly
Trump has not immediately put into force some of the threats he made whilst campaigning for the post of president. Equally resigning from the WHO and other policies give China the opportunity to take a greater global role and some other measures may give China the opportunity to drive a wedge between the US and some of its allies. But key to remember is that Trump is unpredictable and equally comments can be as disruptive as the actual tariffs as far as stock markets are concerned.

Danger alert. China’s financial system is under brutal pressure
When will something break?
There are a lot of issues that will require some very hard choices. The bond market, the housing crisis funding local government, and ensuring the banks don’t collapse. A solution would be to relax capital controls but that is unlikely to happen.

Free exchange Do tariffs raise inflation?
Usually. But the bigger problem is that they harm economic growth and innovation
A detailed look at the wider impact of tariffs on the economy and also on how they can stifle companies. Basically saying that tariffs are bad news all round.

Power-sharing. Why don’t more countries import their electricity?
The economics make sense, but the geopolitics are nerve-racking. Modern technology and time differences make it a very practical option but as Russia’s invasion of Ukraine and subsequent sabotage of undersea cables illustrate some of the dangers. Equally national self interest can be a concerns. But it still makes sense.

Yielding results. Has Japan truly escaped low inflation?
Its central bankers are increasingly hopeful.
It suggests that the seemingly slow moved of the BoJ are the right way to ensure that the country does escape the decades of low inflation. That is good news.

Breaking the ice. The Arctic: climate change’s great economic opportunity
An enormous prize is on offer. When might it be grasped? Sooner than you may think but there are a number of problems in fully achieving it. There are lots of pros and cons involved. Food, resources and shipping are all in focus.

Spies in disguise? Now it’s all about TikTok. But Huawei led the way
The Chinese telecoms firm was the first to raise America’s hackles; a book review.

MARKET INDICATIONS

New Zealand - No Data Due
Australia - No Data Due

Japan
Yen closed 155.98 in US.
Data due lunchtime
Final Coincident Index Nov vs 116.8 Oct (F/cast is 115.3)
Final Leading Economic Index Nov vs 109.1 Oct (F/cast is 107)

S Korea No Data due
Markets closed higher on Friday as Trump’s call fr lower interest rates raised demand for riskier assets. Trading volumes remain moderate. Foreigners and institutions were net buyers with retail net sellers. Semiconductor, steel, bio and entertainment stocks led the daily gains.

Taiwan
Market closed trading in Taiwan is set to resume on Feb. 3, the sixth day of the first month of the Year of the Snake, the exchange said.
Data out Friday afternoon
GDP Growth Rate Adv Q4 1.84% YoY vs 4.17% Q3 (F/cast is 2.8%)

China
Market to open higher after Golden Dragon China Index closed up 250pts 3.72% at 6,965. But volumes are likely to be light.
Data Due
Manufacturing PMI Jan vs 50.1 Dec (F/cast is 50.3)
Non Manufacturing PMI Jan vs 52.2 Dec (F/cast is 51.8)
General PMI Jan vs 52.2 Dec (F/cast is 51.7)
Industrial Profits (YTD) Jan YoY vs -4.7% Dec (F/cast is -5%)

Hong Kong
ADR’s closed up 102pts 0.5% at 20,168 but ADR’s were mixed. In the red were HSBC, CLP, SHKP, CCB, ICBC, BoC HK and CK Hutch. In the green HKEX, AIA, BoC HK, Tencent, Baba, Xiaomi, Meituan.

Futures indicate a lower open. Worth bearing in mind that on Friday there was a HK$2.7b southbound trading net outflow from the Tracker Fund ahead of the Chinese New Year holiday.
Data Due
Balance of Trade Dec vs HK$-43.4B Nov (F/cast is HK$-68B)
Exports Dec YoY vs 2.1% Nov
Imports Dec YoY vs 5.7% Nov

Macau - Data out after market Friday
Inflation Rate Dec 0.2% MoM vs -0.01% Nov (F/cast is 0.3%)
Inflation Rate Dec 0.23% YoY vs 0.3% Nov (F/cast is 0.3%)
Unemployment Rate Dec 1.7% vs 1.7% Nov (F/cast is 1.7%)
Data due Monday
Balance of Trade Dec vs MOP -10.3B Nov (F/cast is -10B)

Singapore - Data Due
2 year Bond Yield vs 3.46% prior
MAS 12 Week Bill Auction vs 3.07% prior
MAS 4 Week Bill Auction vs 3.1% prior

Indonesia - Data Due
Foreign Direct Investment Q4 YoY vs 18.55% Q3

Malaysia - No Data Due
Philippines - No Data Due
Thailand - No Data Due
Cambodia - No Data Due
Vietnam - No Data Due

India - Data Out after market Friday
Foreign Exchange Reserves Jan/17 $623.98B vs $625.87B prior

Europe
Eurozone No data due
Germany Ifo Business Climate, Current Conditions & Expectations
France Unemployment Benefit Claims, Jobseekers Total, 12, 3 & 6 month BTF Auction
United Kingdom No data due

United States
Data Due Chicago Fed National Activity Index, New Home Sales, Dallas Fed Manufacturing Index, 3 & 6 month Bill Auction, Building Permits Final, 2 & 5 year Note Auction.
Earnings continue to be in focus this week
Monday SoFi and AT&T.
Tuesday General Motors & Starbucks watch for new CEO Brian Niccol’s vision for the coffee chain.
Wednesday Fed interest rates comments. T-Mobile, ServiceNow, Microsoft, Meta and Tesla
Thursday Apple, Caterpillar and Intel
Friday Chevron and Exxon Mobil

HEADLINES & NEWS

JAPAN

Meta Platforms will begin test launching ads on its social media platform Threads with a few brands in the U.S. and Japan, it said on Friday, as the app hits over 300 million monthly active users.

During early testing starting Friday, image ads will appear in the Threads home feed, placed between content posts for a small percentage of users, Meta said in a blog.

The social media giant said it will monitor the test closely before scaling it broadly, adding that businesses will be able to extend their existing Meta ad campaigns to Threads.

Japan's top LNG buyer, JERA, plans to increase its purchases of liquefied natural gas from the United States to diversify its supply and meet demand growth spurred by data centres and AI, a senior executive told Reuters. U.S. President Donald Trump pledged to unleash the U.S. energy industry to boost output and threatened the EU with tariffs if the bloc did not buy more gas, meaning JERA might have to compete with other buyers for more U.S. gas. Handling between 30-35 million metric tons (mt) of LNG annually, Japan's largest utility currently sources nearly half of this from the Asia Pacific region, including Australia, Malaysia and Indonesia. However, JERA will be watching closely the long-term sustainability of LNG policies in the United States, the world's largest LNG exporter which in 2024 alone shipped 88.3 million tonnes of the super-chilled gas.

A Chinese court has sentenced a man to death over the fatal stabbing of a Japanese boy in the southern city of Shenzhen, Japan's Kyodo news agency said on Friday, citing Japanese ambassador to China, Kenji Kanasugi. The trial started earlier in the day.

The boy, a 10-year-old Japanese national born to a Japanese father and a Chinese mother, was stabbed on his way to school on a morning in September last year. He died the following day. The assailant, identified by Chinese authorities as a 44-year-old man surnamed Zhong, was formally arrested on Nov. 30 on suspicion of murder, Kyodo had reported. The attack took place on the anniversary of an incident in 1931 that triggered war between China and Japan, a sensitive date at a time when diplomatic relations are in danger of deteriorating. Kyodo said on Friday Chinese authorities described the case as an accidental and isolated incident, without giving motives.

SOUTH KOREA

South Korean prosecutors indicted President Yoon Suk Yeol on Sunday over charges of insurrection and abuse of power, after Prosecutor General Shim Woo-jung convened a meeting with senior prosecutors on the same day. Prosecutors said they indicted Yoon as "concerns about destruction of evidence remain unresolved.”

The unit price of South Korea's exported vehicles last year fell for the first time in eight years amid a prolonged slowdown in electric vehicle sales, data showed Sunday. South Korea exported 2.78 million units of cars worth $64.1 billion last year, according to data by the Korea Automobile Manufacturers Association. The average exporting price per unit totaled $23,048, down $221 from a year earlier. This is the first on-year decrease since 2016, when the unit price stood at $14,264. Over the past years, the unit price had shown constant growth, peaking at $23,369 in 2023 on the back of rising demand for high-priced EV. The recent decline, however, is blamed on waning global demand for eco-friendly cars during the so-called EV chasm, a transitional phase before the widespread adoption of EVs.

Three South Korean shipbuilders were on the list of the world's top 10 companies by new global orders in 2024, while the remaining seven spots were claimed by Chinese shipyards, industry data showed Sunday. Samsung Heavy Industries Co. ranked fifth on the list, based on new orders measured in compensated gross tons, and Hanwha Ocean Co. and HD Hyundai Samho Heavy Industries Co. followed in sixth and seventh places, according to the data by London-based Clarkson Research Services. China's New Times Shipbuilding was on the top, followed by Hudong–Zhonghua Shipbuilding, New Yangzijiang and Hengli Heavy Industry. Dalian Shipbuilding, Waigaoqiao Shipbuilding and Jiangnan Shipyard placed eighth to 10th. In terms of order backlog, however, South Korean companies led the field. HD Hyundai Heavy Industries Co. ranked first globally with 8.93 million CGTs as of January. Samsung Heavy Industries Co. followed with 8.72 million CGTs and Hanwha Ocean placed third with 8.49 million CGTs. HD Hyundai Samho secured the sixth spot in this category. Insiders noted that the results highlight South Korean shipbuilders' performance in securing large-scale orders and maintaining significant backlogs to ensure steady production in the coming years.

KG Mobility announced Sunday the revival of its pickup truck brand Musso, leveraging its heritage to recharge its image and fortunes in the segment. The firm also confirmed the name of the first model under the new brand -- the Musso EV, which combines the advantages of electric vehicles with the practicality of pickups. KG Mobility plans to showcase the Musso at the 2025 Hwacheon Sancheoneo Ice Festival ahead of its official release in the first quarter of this year. Following the initial launch of the SUV brand Musso in 1993, the company introduced the Musso Sport in 2002, the nation’s first sport utility truck. By combining the convenience of SUVs with the payload capacity of pickups, SUTs are designed to suit both daily use and leisure activities. The name “Musso,” derived from the Korean word for "rhinoceros," symbolizes strength and power.

The South Korean won experienced one of the steepest depreciations globally in December 2024, driven by political turmoil following the short-lived imposition of martial law, according to data released Sunday. According to the data by the Bank for International Settlements , the South Korean local currency's real effective exchange rate reached 91.3 at the end of December, down 1.99 points from a month earlier. REER measures the strength of a currency relative to a basket of other currencies, adjusted for inflation. A reading below 100 indicates depreciation compared to the base year, while a reading below the benchmark means the opposite. Among the BIS-listed 64 countries, South Korea's December REER was the second-lowest point, trailing only Japan's 71.3. The monthly decline of 1.99 points was also the third fastest globally, following Brazil's 3.94-point drop and Australia's 2.37-point decline. This marked South Korea's largest monthly REER loss in over two years, since a 2.92-point plunge in September 2022 during the Legoland debt default crisis that triggered a corporate bond yield spike and credit crunch concerns. The won, which hovered around 1,370 won per US dollar in November, plummeted to 1,442 won on Dec. 3 after President Yoon Suk Yeol declared martial law.

The currency further weakened to 1,486.7 won by Dec. 27 as political instability persisted.

TAIWAN - markets are closed this week

CHINA

RMB was shored up by the remarks made by US President Donald Trump that he does not want to wield tariffs against China. Spot USD/CNY swelled 462 bps to close at 7.2412 today (24th), setting an over-one-month high. As of 4:35 pm, USD/CNY in the night session leaped 482 bps. USD/CNH rallied 451 bps to 7.2402, 10 bps above USD/CNY.

The Philippines said on Saturday it has suspended a scientific survey in the South China Sea after two of its fisheries vessels faced "harassment" and aggressive behaviour from China's coast guard and navy. Manila and Beijing have had a series of escalating confrontations in disputed waters of the South China Sea. China claims almost all the strategic waterway - through which $3 trillion in commerce moves annually - overlapping sovereignty claims by the Philippines, Indonesia, Malaysia and Vietnam. Two Philippine fisheries vessels, on their way on Friday to collect sand samples from Sandy Cay near Philippine-occupied Thitu island, encountered "aggressive manoeuvres" from three China Coast Guard ships, the Philippine Coast Guard said in a statement on Saturday.

In its own statement, China Coast Guard said China has "indisputable sovereignty" over the Spratly Islands, including Sandy Cay - which China calls Tiexian Reef - and that it had intercepted two Philippine vessels and driven them away in accordance with law. An international arbitration tribunal ruled in 2016 that China's claims, based on its historic maps, have no basis under international law, a decision Beijing does not recognise.

China's State Administration for Market Regulation (SAMR) announced that Xiaomi Auto Technology, in accordance with the "Regulations on the Administration of Recall of Defective Automotive Products" and the "Implementation Measures for the Administration of Recall of Defective Automotive Products", filed with the SAMR a recent recall involving 30,931 SU7 Standard Edition electric vehicles produced between February 6 and November 26, 2024. Some vehicles within the recall scope may experience software strategy issues that could cause time synchronization anomalies affecting the detection of static obstacles by the intelligent parking assistance function. This will increase the risk of scrapes or collisions, thus posing safety concerns. With the OTA technology, Xiaomi Auto will provide a free software upgrade for the vehicles within the recall scope to eliminate safety risks.

Chinese manufacturing industries flocked to export ahead of the Chinese New Year holiday before U.S. President Donald Trump's tariff hikes on China come into effect, causing congestion at Shenzhen's Yantian port, Reuters reported. Yantian port already increased its daily container handling quota by 15% to 15,000 units from the 20 to 28 January in response to the demand. The report quoted the industry as saying that factories were in a hurry to export before the holidays, and that the congestion was wrought by the limited container quota and container yard space at the port. Container trucking charges also ascended due to the congestion at the port, with the cost of traveling from Shenzhen's Fuyong to Yantian port rising radically from RMB1,000 to RMB2,500, and the unloading fee may be raised by an additional RMB1,000.

Chinese President Xi Jinping visited Benxi City, Liaoning, yesterday (23rd) to inspect the third cold rolling plant at the Benxi Steel cold rolling general plant. He examined the enterprise's centralized control center and production line to understand its efforts in accelerating transformation, upgrading, and promoting high-quality development. While learning about the operation of the centralized control intelligent system at the control center, Xi remarked that Benxi Steel is a long-established enterprise in China. Through the reorganization with Ansteel Group, it has improved the modern enterprise system, while promoting industry transformation and upgrading.

China’s government failed to meet its spending target for last year, as the housing market slump left local governments strapped for cash and unable to meet funding commitments. Total augmented spending was 38.6 trillion yuan (US$5.4 trillion) for last year, a statement from the Chinese Ministry of Finance showed on Friday. That is 5 percent less than what was budgeted in March last year. Increased public spending is key to China’s economic recovery since private investment and consumption demand remains sluggish, but local authorities are struggling to keep up due to plunging land sale revenue and tighter borrowing rules imposed by Beijing to rein in debt risks. The latest data show that fiscal policy failed to provide an adequate boost to the economy last year. Actual spending by central and local governments under their two main budgets — which include everything from infrastructure projects to civil servants’ salaries — was less than 1 percent higher than the level in 2023, missing the targeted spending increase. Augmented fiscal revenue was 28.2 trillion yuan for last year, resulting in a deficit of 10.4 trillion yuan, equivalent to 7.7 percent of gross domestic product, Bloomberg calculations based on official data showed. New housing construction has been dropping for years and slashing demand for land. That has made developers reluctant to purchase sites, choking off a key source of income for local governments at a time when they are collecting less tax from struggling companies. Cities, towns and villages across the country have struggled to pay wages and to spend as much as was budgeted, undercutting support for an economy that was already under pressure because of a lack of private demand.

The EU has resumed its case against China at the WTO over allegations of economic coercion targeting Lithuania, an EU official said. Bloomberg reported on Wednesday that the EU was expected to resume the case this week following a one-year suspension. It might re-suspend the proceedings again as early as next week to gather more evidence. The EU filed a complaint against China at the WTO in 2022 as a result of trade restrictions Beijing imposed on Lithuania after the Baltic country opened a Taiwanese representative office in its capital. China has repeatedly voiced opposition to countries engaging in official contact with the government in Taipei. The commission, the EU’s executive arm, at the time, said that China was using economic coercion against one of its member states — a claim that the US and 17 other countries supported as third parties in the case.

HONG KONG

Earnings
Adriel Chan, Chair at HANG LUNG PPT (00101.HK) said that the Group's performance was solid. The Group will maintain a conservative and prudent attitude towards investment in the market this year, and will keep an eye on investment opportunities based on the returns and the Group's plan. The Group has emphasized on “deleveraging” more than a year ago, and planned to consolidate the Group's policies, which includes interest rate cuts, scrip dividends and provision for property sales, etc., Chief Executive Officer Weber Lo added. Hence, its financial position is now sound. Although there is bad news in the market or from its peers, the Group will “take a good look at its figures”, and the management is now at ease with the Group's financial position.

Profit Alerts
DATANG POWER (00991.HK) anticipated that a net profit of around RMB4.2-4.8 billion will be recorded in the consolidated financial statements for the year ended December 31, 2024, representing a YoY surge of about 208-252%. Net profit after deducting non-recurring gains and losses is expected to soar around 657-763% YoY to RMB4.27-4.87 billion.

CHINA LIFE (02628.HK) issued a positive profit alert. It is expected that the net profit for the year 2024 under ASBE will be in a range of approximately RMB102.368 billion to RMB112.605 billion, up about 100-120% YoY. It is also expected that the net profit for the year 2024 under IFRSs will be in a range of approximately RMB102.368 billion to RMB112.605 billion, up about 122-144% YoY.

HSI Short Selling Friday 17% vs 19% Thursday
Top shorts Ooil (316) 43%, CK Asset (1113) 41%, Chow Tai Fook (1929) 39%, Li Ning (2331) 36%, JD Health (6618) 36%, China Shenhua (1088) 35%, SinoPharm (1099) 34%, Nongfu Spring (9633) 34%, Sands China (1928) 34%, Bud APAC (1876) 33%, Citic (267) 33%, Geely (175) 33%, Xinyi Glass (868) 31%, Hansoh Pharma (3692) 31%, MTRC (66) 31%, HK & China Gas (3) 31%, China Res Power (836) 31%, Haidilao (6862) 28%, CM Bank (3968) 28%, CKI (1038) 27%, Hengan (1044) 27%, Wharf REIC (1997) 27%, Zhong Sheng (881) 27%, Tingyi (322) 27%, NTES-S (9999) 26%, Longfor (960) 26%, Sino Biopharm (1177) 26%, China Overseas (688) 25%, CLP (2) 25%.

WATCH

SINOPEC CORP (00386.HK) unveiled the operational statistics for the year of 2024. Among which, the oil and gas production reached 515 million barrels of oil equivalent (boe), up 2.21% YoY; crude oil production 282 million boe, up 0.26% YoY; and the natural gas production amounted to 1.4 trillion cubic feet, up 4.68% YoY.

CATHAY PAC AIR (00293.HK) acknowledged the findings from the Centre for Health Protection of the Department of Health's investigation into the two suspected food poisoning cases on its flights CX640 from Kathmandu to Hong Kong on 7 and 8 January 2025. From the onset of the incidents, CATHAY PAC AIR has been fully cooperating with the relevant authorities, including the Centre for Health Protection of the Department of Health, in their investigations in an open and transparent manner. CATHAY PAC AIR took food safety very seriously. Given the possible link to the salad, the Company took immediate steps to remove it from circulation following the two cases. CATHAY PAC AIR has already taken additional measures to reinforce its end-to-end food handling process and staff training to further strengthen food hygiene, including adopting all recommendations made by the Centre for Health Protection of the Department of Health.

MEITUAN-W (03690.HK)'s Meituan Drone announced its latest operating data, with more than 200,000 orders completed in 2024, a YoY growth of nearly 100%, and over 80,000 new users. As of the end of 2024, Meituan Drone has opened 53 routes, and recorded over 450,000 delivery orders in total. The Company has opened services in Shenzhen, Shanghai, Beijing, Guangzhou and other cities, covering scenarios like office, community, campuses and libraries.

Kai Tak Sports Park is set to be officially opened on March 1, 2025, when the main stadium will hold a grand opening ceremony, inviting arts performers in Hong Kong, sources divulged, with the details to be announced later. A large-scale rehearsal will be held in Kai Tak Sports Park tonight (24th), and tests will be run in the main stadium, Kai Tak Arena and Kai Tak Youth Sports Ground at the same time, which are anticipated to be attended by about 63,000 people. MTR Corporation said that to tie in with the test event at the Kai Tak Sports Park, the station arrangements and train services of Sung Wong Toi Station and Kai Tak Station on the Tuen Ma Line will be adjusted accordingly, and the frequency of services on the Tuen Ma Line, East Rail Line and Kwun Tong Line will also be increased.

Alipay, Macau Pass and SANDS CHINA LTD (01928.HK) announced earlier that they entered into a tripartite partnership to adopt "Alipay Tap!" payment services at about 300 shops in the Sands Resorts Macao. Since the large-scale launch of "Alipay Tap!" function in Macao, the total transaction value of merchants with "Alipay Tap!" function reached several record highs. Some merchants reported that users' willingness to transact heightened, which led to an immense increase in the total amount of merchandise transactions and the volume of transactions, Macau Pass said. Macau Pass said that it will in future further unite its ecology with Alipay in the hope of expanding the coverage of the "Alipay Tap!" services to all of Macao and integrating it with more local services, such as food and beverage venues and "Alipay Tap!" self-service, so as to provide more convenient payment channels for tourists and merchants.

COUNTRY GARDEN (02007.HK) announced that it currently has 32 projects under construction in the Guangzhou-Qingyuan region, which includes areas such as Guangzhou, Qingyuan, Shaoguan, and Huizhou Longmen. Last year, the company delivered a total of 12,898 homes, involving 56 batches and 1.6 million square meters, at a 100% on-time delivery rate. Among them, 79% of the batches were delivered ahead of schedule.

Friday closings in EUROPE & US

DAX -0.08%, CAC 0.44%, FTSE -0.73%
European markets opened higher but trended lower through the day to close around the day lows.

Ericsson -12% after the company missed estimates on both the top and bottom lines for the fourth quarter of 2024. But Burberry up 10% on a shallower-than-expected dip in sales inQ3; other luxury stocks including Moncler, Swatch and Christian Dior traded higher.

Novo Nordisk up 7% after the company said a new clinical trial result showed that one of its treatments led to a weight loss of 22% among people living with obesity.

DOW -0.32%, NDX -0.5%, S&P -0.29%, Russel 2K -0.3%
Markets opened around flat and drifted lower through the day with concerns about Trump’s policies. Mega caps pulled back from all time highs ahead of earnings; Nvidia -3%, while Tesla -1%.

Excitement toward Trump’s pro-business policies has largely pushed risk assets higher this week as investors focused on his inauguration. Traders were also relieved that there have only been threats on the tariff front have eased although on Thursday Trump called for interest rates to drop immediately.

Texas Instruments -7% on weak earnings guidance. Palantir up 2% tied its longest winning streak on record.

Home sales rose in December, registering their strongest annual gain in three and a half years, the National Association of Realtors reported Friday. Existing sales were at a seasonally adjusted annualized rate of 4.15 million for the month, up 2.2% from November, though slightly below the Dow Jones estimate of 4.2 million. On a monthly basis, it was the best reading since February 2024, while the highest annually since June 2021.

Services PMI 52.8 a 9 month low while manufacturing 50.2 accelerated for the first time since last spring vs 49.7 f/cast.

The firm’s services index from purchasing managers dipped to 52.8, down 4 points from December and below the Dow Jones forecast for 56.5. For manufacturing, the index rose to 50.2, up 2.5 points on the month and beating the estimate of 49.7.

Despite the mixed readings, optimism for the future was high, with the joint services and manufacturing outlook holding at its highest since May 2022.

Banks JPMorgan Chase -0.42%, Citigroup -0.61% Wells Fargo -0.14%, Amex -1.39%
Ecommerce Meta 1.73%, Apple -0.39%, Amazon -0.24%, Netflix -0.74%, Disney 1.01%, Zoom Video 0.2%, Alphabet 1.16% and Microsoft -0.59%,
Tech NXP Semi -2.93%, Nvidia -3.12%, Micron -1.57%, AMD -0.16%, Skyworks -1.43%
Industrial/Discretionary Boeing -1.37%, Caterpillar 0.3%, Simon Property -0.35%, Kohl’s -1.02%, Nordstrom 0.08%, Gap -0.4%, United Airlines 1.94%, Carnival -0.74%, Wynn Resorts -0.11%,
Energy Chevron -0.23%, Exxon Mobil -1.35%,
Consumer Staples Campbell Soup 1.01% General Mills 1.38%, JM Smucker 1.17%

DAILY DATA
USD weak on fears US tariffs will be lower than previously feared, Bitcoin -0.33% at 104,686 (Sunday evening Asia), VIX -1.13% at 14.85,
US T10 down 2bpts to 4.619% and T2 down 2 bpts at 4.266%
OIL Brent 0.27%, WTI 0.05% market steadied after Trump announced sweeping plans to boost domestic production while demanding that OPEC lowers crude oil prices.
Gold 0.45%, Silver 0.64%, Copper -0.4% Platinum 0.06%, Palladium -1%.