PETER’S BUSINESS & FINANCE BRIEFING – Tuesday 4 March 2025, 06:00 Hong Kong
● China’s annual ‘Two Sessions’ to commence ● China’s February factory activity expands at fastest pace in 3 months ● 25% tariffs on Mexico & Canada & additional 10% on China set for today
Tuesday’s Opening Call
Hang Seng (Hong Kong) Projected Open: 22,841 -165 points -0.7%
Nikkei 225 (Japan) Projected Open: 37,340 -445 points -1.2%
Quick Summary - 4 Things To Know Before Asian Markets Open
China's top officials will gather in Beijing for the annual ‘Two Sessions’ meetings this week. They will begin today with the meeting of the 14th National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body. The 14th National People's Congress, China's top legislature, will meet from 5 March. The legislative and political advisory sessions will run for about a week. China's GDP growth target will be one of the top agenda items.
Donald Trump said Monday that 25% US tariffs against Canada and Mexico will go ahead today. “No room left for Mexico or for Canada," Trump said at the White House on Monday. "The tariffs, you know, they're all set. They go into effect tomorrow." "What they'll have to do is build their car plants, frankly, and other things, in the United States, in which case they have no tariffs," he added. The US president has also vowed to impose additional 10% tariffs on China on the same day, which is “set”, US Commerce Secretary Howard Lutnick said Sunday.
China’s factory activity expanded at its fastest pace in three months to 50.8 in February, a private-sector survey showed on Monday. The seasonally adjusted Caixin/S&P Global manufacturing purchasing managers index beat the Reuters poll forecast of 50.3, accelerating from 50.1 in January and 50.5 last December. The private-sector manufacturing PMI has stayed above the 50 threshold that separates expansion from contraction since last October. This marked the highest reading since last November, with output and new orders growing the most in three months as market conditions enhanced. Additionally, foreign sales increased, ending a two-month fall.
China’s largest bubble tea chain Mixue soared 43% on its Hong Kong trading debut, in Hong Kong’s biggest IPO of the year. The shares closed at HK$290 apiece, compared to the IPO offer price of HK$202.5 per share. The company had offered 17.06 million shares in its IPO, raising a total of HK$3.45 billion. Shares of Mixue were highly sought after, with the Hong Kong offering over 5,200 times oversubscribed. The international offering was more than 35 times oversubscribed. Mixue is known for its milk tea, fruit drinks, ice cream and coffee. It sells ice creams and drinks for an average of six Chinese yuan (US$0.82). The Chinese firm has more outlets than McDonald’s and Starbucks.
Week Ahead - March 3rd
On the economic front in the United States this week, investors will closely monitor the January labour report, alongside factory orders, foreign trade data, and speeches by Federal Reserve officials. Donald Trump’s new tariffs for China and neighbours Canada and Mexico are due to come into effect today. The US president will later today address a joint session of Congress outlining his agenda, his first such speech since his inauguration in January.
In the Asia-Pacific region, there will be GDP data from Australia. GDP growth likely accelerated to 0.4% quarter-on-quarter from 0.3% in the September quarter, bringing full-year growth to 1%, according to Moody’s Analytics. There will be a monetary policy decision from Malaysia’s central bank on Thursday. Inflation data from South Korea and the Philippines will be monitored. There will be unemployment figures from Japan. Meanwhile, trade balance data will be published for Australia and China. In Beijing, the annual meeting of the Chinese People’s Political Consultative Conference, a high-profile but largely ceremonial advisory body, starts on Tuesday. This will be followed on Wednesday by the opening of the National People’s Congress, China’s parliament. Investors will be watching out for the targets for fiscal deficit and government bond issuance.
In the Eurozone, key events include the ECB interest rate decision, January inflation data, and the unemployment rate. The 26-member governing ECB council is expected to vote through another 25 bps cut to 2.5%. Turkey will also announce its interest rate decision. Inflation figures will be released for the Netherlands, Switzerland, Mexico, and Turkey. In Canada, the unemployment rate and trade balance will be in focus. GDP growth rates are expected from South Africa and Brazil. Investors will also analyse manufacturing and services PMI data from Spain, and Italy. There will also be focus on a special EU summit on European defence and support for Ukraine on Thursday.
On Sunday, Canada’s Liberal Party will choose its next leader after Justin Trudeau resigned last month. The winner will not just become prime minister but will gain an increased opportunity of winning the country’s next general election. The frontrunners to replace Trudeau are former Bank of England governor Mark Carney and former Canadian finance minister Chrystia Freeland.
Starmer Announces 'Coalition Of The Willing' For Ukraine Peace
UK Prime Minister Sir Keir Starmer hosted a summit in London Sunday, where leaders from Europe, Canada and Turkey met to discuss a four-point plan to work with Ukraine to end the war and defend the country from Russia. Starmer said "we are at a crossroads in history.” Ukrainian President Volodymyr Zelensky said Ukraine felt "strong support" and the summit showed "European unity at an extremely high level not seen for a long time". The UK, France and others have agreed to work with Ukraine on a plan to stop the fighting. During the summit, four points were agreed: To keep military aid flowing into Ukraine, to have Kyiv at the table for any peace talks, for European leaders to aim to deter any future Russian invasion of Ukraine and a "coalition of the willing" will be formed to defend Ukraine and guarantee peace there. Additionally, the UK will be giving Ukraine access to £1.6bn (US$2.0bn) to buy new missiles. This comes on top of a £2.2bn loan to provide more military aid to Ukraine backed by profits from frozen Russian assets.
"We have to learn from the mistakes of the past, we cannot accept a weak deal which Russia can breach with ease, instead any deal must be backed by strength," Starmer said. The UK prime minister did not state which countries had agreed to join this coalition of the willing but said that those who had committed would intensify planning with real urgency. The UK, he said, would back its commitment with "boots on the ground, and planes in the air". "Europe must do the heavy lifting," he said, before adding that the agreement would need US backing and had to include Russia, but that Moscow could not be allowed to dictate terms. "Let me be clear, we agree with Trump on the urgent need for a durable peace. Now we need to deliver together," Starmer said. However, many European countries, including Germany, Spain and Poland, are reluctant to commit to sending troops to Ukraine as part of a mission led by the UK and France. Shortly after the summit, French President Emmanuel Macron said he and Starmer are seeking a one-month truce, Le Figaro reported. However, Starmer later denied this was the UK’s position.
After the summit, Zelensky went to Sandringham where he met King Charles III. He later spoke to reporters at a final press briefing where he said he was ready to sign a deal on minerals with the US. Ukraine was expected to sign the deal, which would grant the US access to Ukraine's rare mineral reserves, during Zelensky's visit to Washington, but the Ukrainian delegation ultimately left early after a heated confrontation with Trump in the Oval Office. Earlier on Sunday, US Treasury Secretary Scott Bessent warned a deal on minerals between the US and Ukraine could not be signed "without a peace deal" with Russia.
Additional 10% Tariffs On China ‘Set’ To Come Into Force
Donald Trump said Monday that 25% US tariffs against Canada and Mexico will go ahead today. “No room left for Mexico or for Canada," Trump said at the White House on Monday. "The tariffs, you know, they're all set. They go into effect tomorrow." "What they'll have to do is build their car plants, frankly, and other things, in the United States, in which case they have no tariffs," he added. Hours ahead of the deadline, Trump dashed investors' hopes for a last-minute reprieve, telling reporters that there was “no room left” for negotiations.
Canada has prepared a list of US$30bn worth of American goods it said it would levy in response to US tariffs. Mexico's president, Claudia Sheinbaum, said at a public event in the city of Colima that "Mexico has to be respected". "Cooperation and coordination, yes, subordination, never."
The US president has also vowed to impose additional 10% tariffs on China on the same day, which is “set”, US Commerce Secretary Howard Lutnick said Sunday. Mexico and Canada have done “a lot” to address Trump’s concerns about border crossings but not enough to address his worries about “fentanyl deaths in America”, Lutnick said on Fox News. China, meanwhile, does not appear to have any room to manoeuvre before tariffs are imposed later today. “They either end the subsidies and they end making these ingredients from fentanyl, or he’s going to put tariffs on there,” Lutnick said. China has vowed to take countermeasures to defend its interests. Beijing said last week it has tightened controls on precursor chemicals and fentanyl-like substances. “If they think they’re going to retaliate, remember they have so much more that they sell to us than we sell to them,” Lutnick said.
Chinese state media said leaders in Beijing have prepared a series of countermeasures to happen on the same day, raising the prospect of an all-out trade war between the world's top two economies. China's state-run Global Times newspaper said the countermeasures would probably target US agricultural and food products.
President Trump has also announced a 25% charge on all steel and aluminium imports, which is meant to come into effect on 12 March. In addition, he has threatened to impose custom "reciprocal" tariffs on individual countries, as well as 25% tariffs on the European Union.
China February Factory Activity Expands At Fastest Pace In 3 Months
China’s factory activity expanded at its fastest pace in three months to 50.8 in February, a private-sector survey showed on Monday. The seasonally adjusted Caixin/S&P Global manufacturing purchasing managers index beat the Reuters poll forecast of 50.3, accelerating from 50.1 in January and 50.5 last December. The private-sector manufacturing PMI has stayed above the 50 threshold that separates expansion from contraction since last October. This marked the highest reading since last November, with output and new orders growing the most in three months as market conditions enhanced. Additionally, foreign sales increased, ending a two-month fall.
This private survey reading on Monday followed the official manufacturing PMI released on Saturday, which also showed that China’s February factory activity expanded at its fastest pace since November. The official PMI rose to 50.2 in February from 49.1 in January, according to the National Bureau of Statistics. The non-manufacturing PMI, which includes services and construction, climbed to 50.4 from 50.2 in January.
The world’s second-largest economy has seen sluggish growth amid tepid domestic demand and a prolonged real estate downturn, leaving exports as a key driver of growth. These figures come as economists warn that fresh US tariffs could pressure manufacturing and weigh on exports, prompting firms to rush front-load shipments ahead of potential trade restrictions. Investors now await the imminent rollout of US President Trump’s additional 10% tariff on Chinese imports this week, coinciding with China’s National People's Congress on Wednesday, where stimulus measures and potential countermeasures could be announced.
China’s Annual ‘Two Sessions’ To Commence
China's top officials will gather in Beijing for the annual ‘Two Sessions’ meetings (‘Lianghui’, in Mandarin) this week. They will begin on 4 March with the meeting of the 14th National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body. The 14th National People's Congress, China's top legislature, will meet from 5 March. The legislative and political advisory sessions will run for about a week.
China's GDP growth target will be one of the top agenda items. Local governments announced 2025 targets earlier this year. If they make those, China will be set up for growth of around 5.2%. But local governments tend to be a little looser with their targets than the central government; historically, the sum of local government targets has been higher than the national target released at the Two Sessions. Shaving off some of this year's local government optimism leaves us with the expected 'around 5%' national growth target, the third in a row.
Moody’s Analytics wrote in a note Monday, “that's a tough goal. China's economy is being squeezed on all sides. US tariffs will smash exports, and subdued household spending and a falling property market will hold back the domestic economy. For those reasons, we expect growth to slow to around 4.2% this year from 5% in 2024. We also expect officials to announce plans to create another 12 million new urban jobs, a figure on par with last year's target. Given the government's compact with its citizens, employment is a hotbed issue; officials worry it could spark social unrest if they fail to live up to their end of the bargain. Given that, China will always meet its annual employment target—not even a pandemic could derail it. We expect no different this year.”
Australia Manufacturing PMI Revised Slightly Lower
The S&P Global Australia Manufacturing PMI was revised lower to 50.4 in February from a preliminary reading of 50.6 but remained above 50.2 in January. The reading signalled a second consecutive improvement in manufacturing sector conditions, and the strongest since February 2023. New orders rose for the first time since November 2022, supported by higher export orders. On the price front, both rates of input cost and output price inflation softened. Business optimism climbed to the highest level in almost three years.
Japan Manufacturing PMI Remains In Contraction For 6th Month
The Au Jibun Bank Japan Manufacturing PMI rose to 49.0 in February, slightly above flash figures of 48.9. The latest result followed January's 10-month low of 48.7, with output falling for the sixth consecutive month, though the pace of contraction eased. New orders shrank, extending the sequence of falls that began in June 2023. Manufacturers noted a slightly sharper drop in foreign business, due to muted demand from the US and China. On the cost side, input price inflation accelerated and was stronger than the series average. Manufacturers raised selling prices at a slightly quicker rate, as exchange rate fluctuations were unfavourable. Sentiment hit its lowest since June 2020, weighed by concerns over slow domestic recovery and the impact of US protectionist policies.
Hong Kong Retail Sales Fall At Softer Pace
Retail sales in Hong Kong fell by 5.2% year-on-year on a volume basis in January, easing from a downwardly revised 11.3% drop in the previous month. This marked the eleventh consecutive month of declining retail activity albeit at a slower pace, as sales rebounded sharply for clothing, footwear and allied products (4% vs -9.2% in December), food, alcoholic drinks and tobacco (7.3% vs -3.5%), and other consumer goods (1.3% vs -5.5%). Sales declined further for jewellery, watches and clocks, and valuable gifts (-20.7% vs -17%) and consumer durable goods (-23.8% vs -23.4%). On a monthly basis, retail sales rose by 8.1%, following an upwardly revised 3.1% gain in the preceding period.
On a value basis, Hong Kong's retail sales dropped 3.2% in January year-on-year, marking the 11th consecutive month of declines. According to official data released by the Census and Statistics Department on Monday, the value of total retail sales in January was estimated at HK$35.3 billion (US$4.5bn). January's drop was narrower than the revised 9.6% decline recorded in December last year.
Taiwan's Manufacturing Growth Accelerates In February
The S&P Global Taiwan Manufacturing PMI increased to 51.5 in February, up from 51.1 in January, signalling a slightly faster pace of expansion. This marks the eleventh consecutive month of improvement in Taiwan's manufacturing sector. Factory conditions in Taiwan continued to improve as the first quarter progressed, with momentum picking up from a slight slowdown at the start of the year. Companies also grew more optimistic about the outlook, with confidence reaching an eight-month high. However, despite the overall optimism, employment levels dipped slightly, marking the sixth consecutive month of workforce reductions across the sector.
Philippines Manufacturing Growth Slows To 11-Month Low
The S&P Global Philippines Manufacturing PMI dropped to 51 in February, down from 52.3 in January, marking the second consecutive month of slowing growth and the weakest expansion in nearly a year. Despite this, manufacturing conditions have improved in each of the past 18 survey periods. Looking ahead, manufacturers in the Philippines remain optimistic about the production outlook for the next 12 months. Firms expressed confidence that improving demand trends, along with a potential boost from the upcoming election, would support further growth.
Indonesia Manufacturing Growth Hits 11-Month High
The S&P Global Indonesia Manufacturing PMI increased to 53.6 in February, up from January’s 51.9. This marked the third consecutive month of growth in factory activity and the fastest pace since March 2024, as new orders grew the most in almost a year, amid a faster rise in output, purchasing, and employment. Output expanded for the fourth month, marking the strongest increase in nine months, boosted by domestic demand amid a slight fall in foreign sales. Additionally, firms raised their buying activity to the quickest pace since last May. Employment rose further, increasing the most since the data began nearly 14 years ago. On the price front, input cost inflation accelerated due to higher raw material prices amid unfavourable exchange rates. Meanwhile, output prices rose, despite easing from the previous month. Sentiment improved to the highest level in nearly three years, supported by stable demand conditions, mainly from the domestic market.
Indonesia Consumer Prices Fall For First Time Since 2000
Indonesia's consumer prices unexpectedly fell by 0.1% in February, missing economists’ forecasts of a 0.4% rise, and reversing a 0.8% gain in the previous month. This marked the first deflation since March 2000, due to the impact of 50% electricity discount tariffs in the first two months of 2025. Core inflation, excluding administered and volatile food prices, accelerated to a 20-month high of 2.5%, surpassing forecasts of a 2.45% rise. On a monthly basis, the CPI unexpectedly dropped by 0.5%, marking the second consecutive decline, following a 0.8% fall in January, which was the steepest drop at least since 2005, compared to estimates of a 0.02% gain.
India Manufacturing Growth Revised Lower
The HSBC India Manufacturing PMI fell to 56.3 in February, below initial estimates of 57.1 and January’s 57.7. While marking the slowest expansion since December 2023, the reading still indicated strong operating conditions. Output and new orders remained elevated, driven by robust domestic and international demand. Hiring continued at above-trend rates, with job creation the second highest in the survey’s history. On prices, input cost inflation eased for the third consecutive month to a one-year low, while charge inflation stayed above the long-run average as firms passed on higher labour costs. Business confidence remained strong, with nearly a third of respondents expecting higher output in the year ahead.
Eurozone Inflation Slows But By Less Than Expected
Eurozone inflation has fallen for the first time in four months, underpinning European Central Bank rate-setters’ hopes that the recent uptick in price pressures is proving temporary. The annual inflation rate in the Eurozone eased to 2.4% in February, down from a six-month high of 2.5% in January but slightly above economists’ expectations of 2.3%, according to a preliminary estimate. Services inflation, viewed as a core gauge for domestic price pressures, also fell from 3.9% to 3.7%, the lowest level since April 2024. The core inflation rate, which excludes volatile food and energy prices, also eased to 2.6%, from 2.7% the previous month, slightly above economists’ forecasts of 2.5% but still marking its lowest level since January 2022. The central bank targets inflation of 2%.
The ECB is set to meet later this week, with rate-setters expected to cut the benchmark deposit rate by 25 bps to 2.5%. Executive board member Isabel Schnabel said last month that inflation risks were increasingly becoming “skewed to the upside”, while borrowing costs had eased a lot. Schnabel told the Financial Times that the central bank should “now” start to debate a “pause or halt” to rate cuts.
US Manufacturing Growth Slows More Than Expected
New data released Monday morning showed US manufacturers' supply costs jumped in February, as Trump’s tariff threats raised the spectre of higher inflation. The purchasing managers index, from the Institute for Supply Management, is one of the first indicators to be published covering President Trump's first full month in office. The manufacturing PMI ticked down to 50.3 in February from 50.9 in January, ISM said Monday. That slightly undershot the 50.6 consensus estimate of economists polled by The Wall Street Journal, but remained above the 50-mark that separates growth from contraction.
New orders fell the most since March 2022 (48.6 vs 55.1). Employment (47.6 vs 50.3) also fell into contraction territory and production slowed sharply (50.7 vs 52.5). In addition, price pressures accelerated to the highest since June 2022 (62.4 vs 54.9).
Respondents were experiencing "the first operational shock of the new administration’s tariff policy," said Timothy Fiore, who chairs the ISM's Manufacturing Business Survey Committee. ISM quoted several survey participants flagging tariff concerns. "The incoming tariffs are causing our products to increase in price. Sweeping price increases are incoming from suppliers. Most are noting increases in labour costs. Inflationary pressures are a concern," ISM quoted one as saying. The report was "stagflationary," said SoFi's Liz Young Thomas in a post on X, or indicating a mix of stagnant growth and inflation.
A second PMI survey from S&P Global surged to a 32-month high. Their US Manufacturing PMI rose to 52.7 in February, surpassing the preliminary estimate of 51.6 and improving from January’s 51.2. The reading signalled the second consecutive month of expansion in the sector and the strongest growth since June 2022. S&P said this could partly reflect advance buying to get ahead of tariff-related price hikes or supply disruption. "Worries have noticeably swelled in relation to the inflationary impact of tariffs," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Singapore Probes Suspected Fraud In Sales Of Nvidia Chips
Singapore has charged three men in a case suspected to involve Nvidia semiconductor sales that potentially breach US export controls, the government announced on Monday. The two Singaporeans and one Chinese national were charged last Thursday with fraud, after the government received a tip-off that servers containing the chips were being exported to Malaysia. “We assess that the servers may contain Nvidia chips,” home affairs minister K Shanmugam told a press briefing. “We will not tolerate individuals and companies violating our laws or taking advantage of their association with Singapore to circumvent export controls of other countries,” he added.
Singapore’s role in the global supply chain of semiconductors has come under scrutiny in recent weeks, with US politicians raising questions about the potential leakage of restricted chips into China. Nvidia generated nearly a quarter of its sales through its Singapore office in the third quarter of 2024, making it the second-largest market after the US. But the company has said that almost all of this is invoicing other international companies through Singapore, with very few chips actually passing through the city-state.
The fraud case relates to the sale of Dell and Supermicro servers imported from the US and then sold to a company in Malaysia. “The question is whether Malaysia was a final destination or from Malaysia it went to somewhere else, which we do not know for certain at this point,” said Shanmugam, adding that the Singaporean government had asked the US and Malaysia for assistance in its investigation.
TSMC To Unveil $100bn Investment In Advanced Manufacturing In US
Taiwan Semiconductor Manufacturing Company will unveil an investment of US$100bn in advanced manufacturing in the US as the world’s biggest chipmaker tries to ward off possible tariffs on chips from Taiwan. A White House official said TSMC would announce the investment today, as chief executive CC Wei meets President Donald Trump. TSMC has already committed US$65bn to build fabrication facilities in Arizona. It was not clear if the US$100bn investment was a separate funding commitment or included some of the money previously pledged.
Samsung Broadens AI Phone Lineup With $300 5G Galaxy Models
The budget artificial intelligence smartphone race is on according to a Bloomberg report. Samsung is bringing some of its new AI features to a refreshed lineup of its affordable A series handsets, with improved photo editing and so-called Circle to Search tools added to its Galaxy A26, priced at just US$299.99. The new A56, at US$499.99, sports enhancements for night and group photography.
The offering comes just weeks after Apple unveiled its latest entry into the lower-cost range of smartphones, the iPhone 16e. The device runs Apple Intelligence, software that has failed to drive consumer interest amid the company’s faltering AI efforts. And at US$599, it also cedes the market for truly cheap devices to the firm’s competitors, Bloomberg’ reported. Those rivals include Google’s Pixel 8a, which can be found for US$399 and also features Circle to Search and AI enhancements for photos and videos. Other budget devices may be released at this week’s Mobile World Congress (MWC), the world’s largest mobile telecoms industry convention, which started in Barcelona yesterday. AI app spending nearly quadrupled to US$1.4 billion last year, according to Appfigures, led by ChatGPT, which has grossed US$529 million since its mobile release in May 2023.
Meanwhile, Xiaomi launched its latest flagship smartphone on Sunday continuing its push into higher-end devices as it seeks to challenge market leader Samsung. The Xiaomi 15 and Xiaomi 15 Ultra are the most recent pair of smartphones from the Chinese technology giant sporting the latest chips and boosted cameras. They were unveiled at the MWC in Barcelona. The Xiaomi 15 starts at €999 ($1,041) and the Xiaomi 15 Ultra starts at €1,499 euros ($1,562). Both devices are powered by Qualcomm’s Snapdragon 8 Elite Mobile Platform, one of the latest processors. The 15 Ultra model also comes with a higher spec camera and bigger display. “Xiaomi has been hugely successful in building its brand with affordable technology, but now it’s moving up the value chain as it moves more into premium devices and that’s well-suited to the European market where we see an affluent audience,” Ben Wood, chief analyst at CCS Insight, told CNBC.
Chinese Shares Rebound After PMI Data
Chinese markets initially rebounded Monday, helping offset some of Friday’s steep losses as investors reacted positively to stronger-than-expected business activity data. However, the rally ran out of steam as the day wore on. Investor sentiment remained cautious with the looming implementation of US President Trump’s additional 10% tariff on Chinese imports. Mainland China’s CSI300 was up 1.0% at the high of the day, partially recovering from a 2.0% tumble on Friday. However, it gave up the gains to end the day flat at 3,888.
In Hong Kong, the Hang Seng Index closed with gains of 63 points, or 0.3% at 23,006. The city’s benchmark index was up 1.2% at its peak on Monday. Hong Kong stocks dropped 3.3% Friday, the most in more than three months, wiping out US$196 billion in market value. The decline trimmed the month’s gains to 13.4%, but it is still the best performer among the major stock markets globally. The Hang Seng Tech Index fell 0.6% Monday adding to Friday’s 5.3% drop, its worst single day performance since October 8. However, it was up 17.9% in February. The Tech Index entered a bull market last month after a 20% gain from a January low. Alibaba led the gains on the broader market with a gain of 2.3%.
Billy Leung, an investment strategist at Global X ETFs, said “markets were already fatigued and tired by tariff talk, and now investors are being forced to reassess.” “The extra 10% is frustrating because it keeps uncertainty alive and reinforces the risk that this becomes a pattern.” The new tariff risks stifling a rally in Chinese stocks spurred by the breakthrough in artificial intelligence technology by start-up DeepSeek, which launched a cheaper but high-performing chatbot.
China’s largest bubble tea chain Mixue soared 43% on its Hong Kong trading debut, in Hong Kong’s biggest IPO of the year. The shares closed at HK$290 apiece, compared to the IPO offer price of HK$202.5 per share. The company had offered 17.06 million shares in its IPO, raising a total of HK$3.45 billion. Shares of Mixue were highly sought after, with the Hong Kong offering over 5,200 times oversubscribed. The international offering was more than 35 times oversubscribed. Due to overwhelming demand, the company reallocated more shares to the Hong Kong offering. The IPO has gained the support of five cornerstone investors, which include M&G Investments, HongShan Growth, Persistence Growth Limited, HHLR Fund and Meituan’s Long-Z Fund. Mixue is known for its milk tea, fruit drinks, ice cream and coffee. It sells ice creams and drinks for an average of six Chinese yuan (US$0.82). The Chinese firm has more outlets than McDonald’s and Starbucks. Its IPO comes weeks after Guming’s, another Chinese bubble tea chain. Guming fell 1.0% on Monday. Shares of other Chinese bubble tea companies listed in Hong Kong slumped on Monday. Nayuki traded down 18.6%, while Sichuan Baicha Baidao was 5.8% lower.
China’s largest electric vehicle maker BYD plans to raise up to HK$40.7 billion (US$5.05bn) in a primary share placement to support its research and development efforts and overseas expansion. The company, which launched the book building for the offer on Monday evening, will issue 118 million shares at a price ranging from HK$333.00 to HK$345.00 per share. The offer price represents a discount of 5.1% to 8.4% to its closing share price of HK$363.60. This is the biggest post-IPO fundraising by BYD since its listing in Hong Kong in 2002. In 2021, BYD raised HK$29.9 billion from a share placement.
Asia-Pacific Markets Mostly Rise Ahead Of Tariffs
Asia-Pacific markets mostly rose Monday as investors awaited clarity on Trump’s tariff plans. Japan’s benchmark Nikkei 225 was up 1.7% at 37,785. Shares of Japan’s Seven & i Holdings rose 2.4% Monday, following a report by Nikkei Asia that the company was looking to appoint Stephen Hayes Dacus as president. Dacus, who is currently the lead independent director at Seven & i Holdings’ retail group, will be taking over from Ryuichi Isaka who is stepping down, the report added. Seven & i Holdings said last week that its founding family had failed to secure the financing needed to buyout 7-Eleven. Canadian convenience store operator Alimentation Couche-Tard has also been eyeing the company.
The yield on 30-year Japanese government bonds (JGBs) rose 1 bps to touch 2.37%, hitting a new 17-year high. The yield on 10-year JGBs was 4 bps higher at 1.41%, after hitting a 15-year high on February 20. This comes amid speculation of more interest rate hikes by the Japanese central bank.
Taiwan’s Taiex index was down 1.3%, falling to its lowest level since early February. Declines were broad-based across industries and with losses led by the technology, utilities and academic and education services sectors. Among the worst performers was Uniflex Technology, down 9.8%, and Phoenix Silicon International, which fell 9.8%.
Australia’s S&P/ASX 200 closed 0.9% higher. South Korean markets were closed for a public holiday. In February, the KOSPI was up 0.6%.
In India, the BSE Sensex fell 0.2% to 73,086. Data showed Friday that India’s economy expanded 6.2% from a year ago in its third fiscal quarter ended December, recovering from a seven-quarter low. The print is higher than the revised 5.6% growth in the July to September quarter.
Defence Stocks Send European Markets To Record Highs
European markets closed at record highs on Monday, as defence shares soared after regional leaders held security talks that could lead to increased military spending. The regional Stoxx 600 index oscillated between gains and losses but settled 1.1% higher at a record high. The Stoxx Europe aerospace and defence index rose 8%, marking its best session in five years. France’s CAC 40 Index surpassed its May record high, while Germany’s DAX Index gained 2.6% also hitting record highs. London’s FTSE 100 rose 0.7% to an all-time high.
Among the biggest movers were Germany’s arms manufacturer Rheinmetall, up 13.7%, and Britain’s BAE Systems, which rose 14.6%. Analysts at JP Morgan upgraded their price targets on both companies Monday. Sweden’s Saab (11.6%), Italy’s Leonardo (+16.1%), and France’s Dassault Aviation (+14.8%) and Thales (+16.0%) were also at the top of the Stoxx 600 performers. Germany’s Hensoldt closed 22.3% higher. Rolls-Royce, a player in defence as well as commercial aerospace which hit an all-time high last week after reinstating its dividend, added another 4.4%.
Meanwhile, Sweden’s krona surged 1.5% against the dollar Monday, outperforming its G-10 peers. The nation’s military industry is seen as a major beneficiary of any funding increase and its defense exports are among the biggest of major economies as a share of gross domestic product.
Reuters reported Sunday that the parties likely to form the next German government were considering setting up special funds for both defence and infrastructure, with the former potentially unlocking €400 billion (US$416bn) in spending. Robin Winkler, chief Germany economist at Deutsche Bank, said in a Monday note that the move would be “a fiscal regime shift of historic proportions.”
US Stocks Tumble After Trump Confirms Tariffs On Mexico & Canada
US stock markets dropped Monday after Trump confirmed 25% tariffs on America's two biggest trading partners, Canada and Mexico, would be moving forward. A 10% tariff on Chinese imports is also expected to be implemented after the US accused Beijing of not doing enough to stop the flow of fentanyl into the US. All three major indices were down more than 2% at one stage intra-day. The technology-heavy Nasdaq Composite slid 2.6% by the close, leading declines among the three major indices. The S&P 500 fell 1.8% to 5,850, marking its worst day since December and bringing its year-to-date performance to a loss of about 0.5%. The Dow dropped 650 points, or 1.5%, to finish at 43,191. The small cap-focused Russell 2000 dropped 2.8%. Losses accelerated in the afternoon following the tariffs announcement. All three indices traded up earlier in the day, with the Dow rising nearly 200 points at session highs.
Technology was the worst hit sector, plunging 3.5%. Nvidia closed 8.7% lower. One-time popular artificial intelligence plays like Broadcom (-6.1%) and Super Micro Computer (-13.0%) also plunged. Stocks set to take a direct hit from the tariffs or retaliation by the targeted countries also fell. GM (-3.6%) and Ford (-1.7%) hit their lows of the session after Trump’s comments. Exchange-traded funds from iShares tracking Mexico and Canada each fell more than 1%.
Treasury Yields Fall
Benchmark 10-year Treasury yields fell 5 bps to 4.15%. On Friday, yields settled at 4.20%, after their steepest one-month decline in more than a year. The 2-year yield was off 4bps at 4.94%.
Dollar Heads Towards 2-Month Low
The US dollar lost ground against other major currencies. The US Dollar Index was 0.8% lower at 106.69, moving closer to a two-month low hit below 106.2 hit last week. The move was largely driven by the euro's strength, fuelled by renewed optimism over a potential resolution to the Ukraine war. The euro rose 0.9% to $1.0468. The British pound strengthened 0.8% towards $1.27, moving closer to an over two-month high hit above $1.27 on February 26.
The Japanese yen rose 1% to ¥149.12 per dollar on Monday, reversing a two-day decline. The Australian dollar stabilized above $0.62 on Monday after declining for six consecutive sessions. The Aussie, often seen as a proxy for the yuan, also benefited from stronger-than-expected Chinese PMI data.
The offshore yuan stabilized around Rmb 7.30 per dollar, as investors digested stronger-than-expected PMI data. A private survey showed that China’s manufacturing PMI rose to 50.8 in February, up from 50.1 in January, surpassing expectations of 50.3 and reaching a three-month high, as millions of migrant workers returned after the extended Lunar New Year holiday. Moreover, official data released over the weekend indicated an unexpected expansion in factory activity, while services sector growth exceeded expectations.
Gold Gains On Trump Tariff Concerns
Metals prices ended higher Monday ahead of Trump's promised 25% tariffs on imports from Canada and Mexico, which are big suppliers to the US. After slumping 2.6% last week, spot gold rose 0.9% to $2,885 an ounce, as concerns over Trump’s tariff policies prompted haven flows into bullion. The inflationary impact of these actions also supports gold, which is often seen as a hedge against rising prices. Adding to its appeal, the US dollar retreated from a two-week high, making the metal less expensive for other currency holders. Moreover, the resurgence of fears about the health of the US economy have boosted market expectations for Federal Reserve interest-rate cuts, increasing bullion’s allure as a non-yielding asset.
Silver futures gained 2.5%, their best day since January 30, before the tariffs against Mexico were originally set to take effect. About one of every four ounces of silver produced globally comes from Mexico, according to Societe Generale analysts.
Copper futures added 1.0% and are now up 15% this year. The US imports about 45% of the metal crucial to home construction and electronics manufacturing, with Canada and Mexico being its second- and third-largest suppliers, respectively.
Oil Falls As OPEC+ Increases Production
Brent crude oil futures fell 2.5% to $71.37 per barrel on Monday, marking their lowest level since December 9. OPEC+ said Monday that it would begin a long-delayed plan to ramp up production, ending a more than 18-month attempt to prop up prices at the expense of market share. The decline was also driven by fears that new US tariffs on Canada and Mexico could slow economic growth and dampen oil demand.
Crypto Gives Up Weekend Gains
Bitcoin retreated to below $86,000, erasing most of its gains from a Sunday rally after Donald Trump revealed the names of five cryptocurrencies that he says he'd like to be included in a new strategic reserve to make the US "the Crypto Capital of the World". The market prices of the five coins he named, Bitcoin, Ethereum, XRP, Solana and Cardano, all swiftly jumped Sunday after the announcement. Bitcoin jumped more than 12% to above $95,000 at one stage Monday. Bitcoin hit a low of $78,200 on Friday. In just three hours on Monday, crypto markets added over US$300 billion of market cap on the news.
It is unclear how the new stockpile will work. It is also unclear whether creating a new national strategic stockpile would require an act of Congress. More information is expected on Friday, when Trump plans to host the first Crypto Summit at the White House. The reserve may also open the door for moving all US spending on Blockchain, as Elon Musk proposed one month ago. This means US$6.9 trillion of US spending per year could be placed on a decentralized ledger.
Peter Lewis’ Money Talk Podcast
On Tuesday’s “Peter Lewis’ Money Talk” podcast, I’ll be joined by Mark Michelson, Chairman of the Asia CEO Forum at IMA Asia, Peter Kim, Head of Global Investment Strategy at KB Financial Group in Seoul, and in Washington D.C., our US Economics Correspondent, Writer & Broadcaster, Barry Wood.
The podcast is also available on Apple Podcasts, YouTube Studio and Spotify.
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