PETER’S BUSINESS & FINANCE BRIEFING – Monday 24 March 2025, 06:00 Hong Kong

● Trump says ‘there’ll be flexibility’ on reciprocal tariffs ● US investigates Chinese Telecom groups over security risks ● Profit taking hits Hong Kong stocks, with Hang Seng down 2.2%

Donald Trump on Friday said there will be “flexibility” on his reciprocal tariff plan, even as he seemed to oppose the idea of making exceptions for the forthcoming duties. © Mario Tama/Getty Images

Monday’s Opening Call

Hang Seng (Hong Kong) Projected Open: 23,753 +63 points +0.3%

Nikkei 225 (Japan) Projected Open: 37,585 -92 points -0.2%

Quick Summary - 4 Things To Know Before Asian Markets Open

1. Donald Trump on Friday said there will be “flexibility” on his reciprocal tariff plan, even as he seemed to oppose the idea of making exceptions for the forthcoming duties. Trump has said he’ll impose so-called reciprocal tariffs from April 2, which would be customized for each trading partner to offset any perceived disadvantage for American companies. “People are coming to me and talking about tariffs, and a lot of people are asking me if they could have exceptions,” Trump told reporters in the Oval Office. “And once you do that for one, you have to do that for all,” he said. He also insisted that he did not change his mind when he gave top automakers a one-month exemption on a prior round of import duties in early March. “I don’t change. But the word flexibility is an important word,” he said. “Sometimes it’s flexibility. So there’ll be flexibility, but basically it’s reciprocal.”
   
   

2. The US Federal Communications Commission is investigating several Chinese telecom companies, including Huawei and China Telecom, over concerns that some of them are ignoring restrictions on their operations in the US. The regulator said it had opened a “sweeping investigation” into Chinese groups that also include ZTE, a big telecoms equipment provider, and Hikvision, the world’s largest maker of surveillance cameras. It is also targeting China Mobile International USA, and the US subsidiaries of China Telecom, and China Unicom.
   
   

3. Japan’s core inflation eased in February government data showed on Friday, but was higher than expectations, bolstering the case for further interest rate hikes. Japan’s headline inflation rose 3.7% year-on-year in February, easing from a two-year high of 4% seen in January. Core inflation, which excludes prices of fresh food, was at 3%, lower than January’s figure of 3.2%. However, the core inflation figure was higher than expectations of 2.9% from economists polled by Reuters. The so-called “core-core” inflation rate, which strips out prices of both fresh food and energy and is closely monitored by the BOJ, climbed to 2.6% from 2.5% in the month before.
   
   

4. The biggest US investors in TikTok’s owner ByteDance are exploring a deal alongside software giant Oracle designed to assure President Donald Trump that the viral video app is free of Chinese control, according to a report in the Financial Times Friday. Under the plan, existing backers of ByteDance including General Atlantic, Susquehanna, KKR and Coatue will seek to acquire additional stakes in a spun-off TikTok US business. These financial institutions would look to buy out Chinese investors from the TikTok US business. However, ByteDance would look to maintain a stake in the app’s US arm.

Trump Says ‘There’ll Be Flexibility’ On Reciprocal Tariffs

Donald Trump on Friday said there will be “flexibility” on his reciprocal tariff plan, even as he seemed to oppose the idea of making exceptions for the forthcoming duties. Trump has said he’ll impose so-called reciprocal tariffs from April 2, which would be customized for each trading partner to offset any perceived disadvantage for American companies. “People are coming to me and talking about tariffs, and a lot of people are asking me if they could have exceptions,” Trump told reporters in the Oval Office. “And once you do that for one, you have to do that for all,” he said. He also insisted that he did not change his mind when he gave top automakers a one-month exemption on a prior round of import duties in early March. “I don’t change. But the word flexibility is an important word,” he said. “Sometimes it’s flexibility. So there’ll be flexibility, but basically it’s reciprocal.”

The April 2 start date for his reciprocal tariffs has been hyped as America’s “liberation day.” Trump and his officials say the plan will effectively assign tariff rates to all countries that have their own tariffs on US goods. Countries with other non-tariff trade policies that the Trump administration opposes, such as value-added taxes, could also be subject to new duties.

Trump also said Friday that he plans to speak with Chinese President Xi Jinping. Beijing has already slapped retaliatory tariffs on US agricultural products in response to Trump’s broad tariffs on Chinese imports. Premier Li Qiang, responsible for the Chinese economy under leader Xi Jinping, told foreign business leaders gathered in Beijing on Sunday that uncertainty and instability were rising, but China would choose the “correct path” of globalisation and multilateralism. “We have preparations for possible unexpected shocks, which of course mainly come from external sources,” Li said. And in a thinly veiled swipe at what Beijing sees as western protectionism, Li urged attendees at the China Development Forum to be “staunch defenders” of globalisation and “resist unilateralism”.

In just a few short months, Trump has upended the US$24 trillion market for global merchandise trade. The threatened 25% US tariff on imports from the European Union risks a 70% cut in the bloc’s exports to the US, according to Bloomberg Economics (BE). Similar duties on most Canadian and Mexican imports, and increasing the charge on China to 20%, would create a huge disruption, with BE saying it risks a 65% drop in China’s exports to America. Last week, the OECD said that Trump’s aggressive trade policies may set the world on the path of slower growth and higher inflation. Trump’s tariff orders on imports from Canada, Mexico and China, the three largest trading partners of the US, which together accounted for about 40% of all merchandise trade last year, are intended to address what he calls a “threat to the safety and security of Americans, including the public health crisis of deaths due to the use of fentanyl.”

Trump says the short-term pain will be worth it. He has talked about using tariffs to revitalize manufacturing and stop the US from getting “ripped off” by other countries due to trade imbalances. He floated the idea of using a mix of tariffs and incentives, such as expedited permitting approval, to entice firms to build their facilities in the US. “We’re going to bring the companies back,” he said during an interview at the Economic Club of Chicago in October. “We’re going to lower taxes still further for companies that are going to make their product in the USA. We’re going to protect those companies with strong tariffs.” He also says the revenue brought in by tariffs could help pay for the tax cuts he has promised. He aims to slash the corporate tax rate to 15%, from 21%, and exempt workers’ tips and social security earnings from taxation.

China Imports Of US Commodities & Cars Collapse

Chinese imports of US cotton, cars and some energy products plunged in the first two months of the year after Trump started imposing tariffs and Beijing retaliated. In a prelude to what could be widespread disruption to global trade, Chinese purchases of cotton fell almost 80% from a year earlier, according to Bloomberg analysis of data. Imports of large-engine cars were down nearly 70%, while purchases of crude oil and liquefied natural gas dropped more than 40%. All these goods were subject to Chinese retaliatory tariffs either in February or March. Some US goods targeted by China saw growth, including soybean imports which rose almost 50%, and purchases of processors and chips nearly doubled.

WSJ: China Explores Limiting Its Own Exports To Mollify Trump

China is considering trying to blunt greater US tariffs and other trade barriers by offering to curb the quantity of certain goods exported to the US, according to advisers to the Chinese government that spoke to the Wall Street Journal. The strategy mirrors that adopted by Japan in the 1980s when Tokyo’s adoption of so-called voluntary export restraints, or VERs, to limit its auto shipments to the US in the 1980s helped prevent Washington from imposing higher import duties. A similar move from Beijing, especially in sectors of key concern to Washington, like electric vehicles and batteries, would mitigate criticism from the US and others over China’s “economic imbalances” whereby heavily subsidized companies make stuff for slim profits but saturate global markets, to the detriment of other countries’ manufacturers, the WSJ reported over the weekend.

According to the advisers to the Chinese government, it is partly because of the potential US pressure on this issue that China’s economic officials are exploring emulating aspects of the Japanese approach. The Xi leadership has indicated a desire to cut a deal with the Trump administration to head off greater trade attacks. Similar to Japan, the Chinese advisers say, Beijing may also consider negotiating export restraints on EVs and batteries in return for investment opportunities in those sectors in the US. In some officials’ views, they say, that might be an attractive offer to Trump, who at times has indicated an openness to more Chinese investment in the US even though members of his administration firmly oppose it. Beijing’s economic imbalances aren’t new but have been made worse in recent years by Xi’s policy of encouraging factories to pump out more goods, regardless of domestic demand, that can keep China’s economy running in the event of severe Western sanctions or an outright conflict.

Trump has directed federal agencies to assess the economic relationship with China. The review, due in early April, will then initiate a process within the administration for evaluating how to address trade issues with China. “If I were the Chinese, I’d put VERs on the table or at least have them in my back pocket,” says Arthur Kroeber, founding partner and head of research at Gavekal Dragonomics.

US Investigates Chinese Telecom Groups Over Security Risks

The US Federal Communications Commission is investigating several Chinese telecom companies, including Huawei and China Telecom, over concerns that some of them are ignoring restrictions on their operations in the US. The regulator said it had opened a “sweeping investigation” into Chinese groups that also include ZTE, a big telecoms equipment provider, and Hikvision, the world’s largest maker of surveillance cameras. It is also targeting China Mobile International USA, and the US subsidiaries of China Telecom, and China Unicom. The other targets are two-way radio maker Hytera Communications, Dahua Technology, which makes surveillance cameras, and Pacifica Networks Corp, a telecoms provider and its subsidiary ComNet.

FCC chair Brendan Carr said the agency believed some groups were ignoring previous US efforts to address security threats from China. The FCC has previously revoked some authorisations to operate in the US, and placed some companies on the “covered list” of groups from which the government cannot buy products because they are thought to pose a security threat. “We have reason to believe that, despite those actions, some or all of these covered list entities are trying to make an end run around those FCC prohibitions by continuing to do business in America on a private or ‘unregulated’ basis,” Carr said. “We are not going to just look the other way.” The FCC said it was seeking detailed information about ongoing operations in the US by the companies it was targeting and was trying to determine if the targets of the probe were receiving help from any other companies.

The Chinese embassy in Washington said Beijing “opposes overstretching the concept of national security, using national apparatus to bring down Chinese companies”. Spokesperson Liu Pengyu added, “we oppose turning trade and technological issues into political weapons.”

China Property Market Stabilising Says Research Report

UBS analysts on Wednesday became the latest to raise expectations that China’s struggling real estate market is close to stabilizing. “After four or five years of a downward cycle, we have begun to see some relatively positive signals,” John Lam, head of Asia-Pacific property and Greater China property research at UBS Investment Bank, told reporters. “Of course, these signals aren’t nationwide, and may be local,” Lam said. “But compared to the past, it should be more positive.”

One indicator is improving sales in China’s largest cities. Existing home sales in five major Chinese cities have climbed by more than 30% from a year ago on a weekly basis as of Wednesday, according to CNBC analysis of data accessed via Wind Information. The category is typically called “secondary home sales” in China, in contrast to the primary market, which has typically consisted of newly built apartment homes. UBS now predicts China’s home prices can stabilize in early 2026, earlier than the mid-2026 timeframe previously forecast. They expect secondary transactions could reach half of the total by 2026.

Japan Inflation Eases From 2-Year High

Japan’s core inflation eased in February government data showed on Friday, but was higher than expectations, bolstering the case for further interest rate hikes. Japan’s headline inflation rose 3.7% year-on-year in February, easing from a two-year high of 4% seen in January. Core inflation, which excludes prices of fresh food, was at 3%, lower than January’s figure of 3.2%. However, the core inflation figure was higher than expectations of 2.9% from economists polled by Reuters. The so-called “core-core” inflation rate, which strips out prices of both fresh food and energy and is closely monitored by the BOJ, climbed to 2.6% from 2.5% in the month before. The inflation figures came shortly after the Bank of Japan (BOJ) held interest rates steady.

The BOJ said that “underlying CPI inflation is expected to increase gradually” and be “generally consistent” with its target of 2%. The BOJ said core inflation is likely to increase over its 2025 fiscal year, due to high rice prices and the easing of government measures to push down inflation.

South Korea Producer Inflation Eases In February

Producer inflation in South Korea rose 1.5% year-over-year in February, slowing from an upwardly revised 1.8% in the previous month. The deceleration was driven by a softer increase in manufacturing product prices (1.3% vs. 1.7% in January) and services (1.6% vs. 1.8%). In contrast, costs for electricity, water, and gas accelerated (5.1% vs. 4.2%), while prices for agricultural, forestry, and marine products continued to decline (-2.1% vs. -1.9%). On a monthly basis, producer prices were flat, following a 0.6% increase in January.

Malaysia Inflation Rate Hits 13-Month Low

The annual inflation rate in Malaysia dropped to 1.5% in February from 1.7% in the previous two months, marking the lowest print since January 2024 and matching economists’ forecasts. Prices of food & beverages remained at a three-month low (at 2.5%). Simultaneously, costs slowed for housing (2.3% vs 2.8%) and transport (0.7% vs 0.9%). Core consumer prices, excluding volatile fresh food items and administered costs, rose 1.9% y/y, the most in six months, after a 1.8% gain in January. Monthly, consumer prices increased by 0.5%, the steepest pace in a year, after edging up 0.1% in the prior two months.

Thailand Posts Largest Trade Surplus In Almost 18 Months

Thailand posted a trade surplus of US$2 billion in February, reversing from a US$0.55 billion deficit in the same month of the previous year. It marked the first trade surplus in five months and the largest since September 2023, due to a surge in exports and a sharp slowdown in imports. Exports jumped 14% from a year earlier to a four-month high of US$26.71 billion, marking the eighth consecutive month of expansion, following a 13.6% surge in January. Meanwhile, imports grew by 4% to US$24.72 billion, the ninth straight month of growth, slowing sharply from a 7.9% rise in the previous month. Last year, the trade balance registered a deficit of US$6.28 billion, with exports growing by 5.4%, less than the 6.3% growth in imports.

Bank of Russia Holds Rates As Inflationary Pressures Persist

The Bank of Russia held its key rate unchanged at 21% on Friday, citing high inflationary pressures. “The Bank of Russia estimates that the achieved tightness of monetary conditions creates the necessary prerequisites for returning inflation to the target in 2026,” it said in a statement on Friday. “Achieving the inflation target will require a long period of maintaining tight monetary conditions in the economy. If disinflation dynamics do not ensure achieving the inflation target, the Bank of Russia will consider raising the key rate,” it said. The central bank said Russia’s annual inflation was 10.2% as of March 17 and could reduce to 7-8% in 2025, before returning to 4% in 2026 and staying at this target further onward.

Week Ahead - March 24 to 30

The last full week of March will bring new data to provide detail on how US tariffs and government cost-cutting are affecting the economy. The Fed's preferred inflation measure, the personal-consumption-expenditures index, is due Friday. Last week, Fed Chair Jerome Powell indicated the central bank would wait for further clarity on the economy before moving again on interest rates. Other US data of interest this week includes preliminary purchasing managers indices from S&P Global, covering both manufacturing and services, durable goods orders, consumer confidence data and the University of Michigan consumer sentiment index. An earlier reading for March showed sentiment falling to the lowest since 2022. Revised fourth quarter GDP data are also expected, as are weekly jobless claims. Housing data includes the Case-Shiller home-price index and new-home sales data for February.

In Asia, PMIs will be released for Australia, Japan and India. It’s a data light week in China with just the PBoC’s 1-year medium-term lending facility (MLF) and industrial profits to contend with. At its last meeting, the PBoC left the MLF steady at 2.0%. In Japan, the minutes of the last BoJ monetary policy meeting will be provided and there will be inflation data from Tokyo, a leading indicator of nationwide trends. Australia will report monthly inflation data on Wednesday. On the earnings front, China’s best-selling automaker, BYD, is due to report its full-year earnings today and revenue could top US$100 billion, a first for BYD that would also put it ahead of Tesla, whose 2024 sales were US$97.7 billion.

Also in Asia, the HSBC Global Investment Summit, hosted by the bank’s chair Mark Tucker, opens in Hong Kong on Tuesday. Speakers at the two-day event include Hong Kong financial secretary Paul Chan Mo and Hong Kong chief executive John Lee. The Boao Forum for Asia begins its four-day annual conference on Tuesday in China, often seen as the region’s answer to the World Economic Forum meetings in Davos. There will be anticipation about further details on China’s plan to stimulate its domestic economy.

Globally, there will be PMIs for France, Germany, the Eurozone, and the UK. Inflation data will be reported for the UK, France, and Spain. Meanwhile, Germany’s unemployment rate and Ifo business climate, Canada’s February growth estimate, the UK’s goods trade balance, and Mexico’s interest rate decision will also be closely watched. Another closely followed event will be the UK Chancellor of the Exchequer’s Spring Statement. Large spending cuts are expected to balance the budget as growth forecasts are revised down and the cost of servicing UK government debt increases.

On the political front, there will be talks over the next seven days between the US and Russia about the war in Ukraine, hosted by Saudi Arabia. Germany’s new grand coalition, led by newly appointed Chancellor Friedrich Merz, will take its place in the 21st Bundestag on Tuesday as the country’s new parliament convenes after last month’s election. The far-right Alternative for Germany and far-left Die Linke will together hold more than a third of the seats in the new Bundestag.

US Investors In ByteDance Explore TikTok Deal

The biggest US investors in TikTok’s owner ByteDance are exploring a deal alongside software giant Oracle designed to assure President Donald Trump that the viral video app is free of Chinese control, according to a report in the Financial Times Friday. Under the plan, existing backers of ByteDance including General Atlantic, Susquehanna, KKR and Coatue will seek to acquire additional stakes in a spun-off TikTok US business, multiple people familiar with the talks told the FT. Oracle would also potentially take a small holding in the business and secure the US app’s data. These financial institutions would look to buy out Chinese investors from the TikTok US business, one of the people said. However, ByteDance would look to maintain a stake in the app’s US arm, said another person, adding the exact structure of the deal remains fluid and other investors could also be brought in.

The discussions come as TikTok faces an April 5 deadline for a federal law that will ban the app in the country unless its Beijing-based owner sells the US arm to non-Chinese entities. The legislation, which was introduced by Congress over national security concerns, initially came into force in January, forcing the app to go dark temporarily for its 170 million US users. However, the app’s service swiftly returned after Trump signed an executive order extending the deadline for a deal to be struck by 75 days and stated that he wanted the US to have a “50% ownership position in a joint venture”.

Last week, Trump said that his administration was now in discussions with “four different groups” who were potential buyers. Any deal would require approval from Trump, as well as ByteDance and the Chinese government, which previously threatened to block any deal but has since softened its stance. ByteDance strongly prefers the deal structure centred on Oracle than others that are circulating, according to the FT report.

Foxconn Close To Deal To Build EVs For Mitsubishi

Taiwan’s Foxconn is close to securing a contract with Mitsubishi Motors for the production of electric vehicles in a landmark move for the iPhone supplier’s efforts to break into the car industry, the Financial Times reported Friday. The world’s largest contract electronics manufacturer is set to announce a deal in the coming weeks to produce EVs for the Japanese carmaker, allowing Mitsubishi to expand its line-up of models at lower cost.

The agreement would be a coup for Foxconn, which has been trying to break into EV production since 2019. Bringing in a contract electronics manufacturer to build its EVs would also mark a major shift for Mitsubishi as it fights back against China’s dominance in software-heavy battery-run cars. Mitsubishi, which has been considering a deal with Foxconn for some time, sees benefits in reducing its development and production costs by working with the Taiwanese group to increase its roster of cars for sale.

7-Eleven & Circle K Owners Lineup US Stores Carve-Out

Alimentation Couche-Tard and Seven & i expect concrete negotiations with private equity groups to start within weeks on the carve-out of thousands of stores in the US, according to a Financial Times report Friday. It would be a pivotal moment for the Canadian group’s US$47bn takeover attempt of the 7-Eleven owner. The Japanese group has said it needs firm assurances on how any deal would pass the scrutiny of US regulators before it agrees to more substantive talks. ACT owns the Circle K brand and, combined, the two groups would comfortably hold the number one position in the fragmented US convenience store market.

While communicating it is co-operating in shareholders’ best interests, Seven & i has consistently rebuffed ACT’s approaches and questioned the deal’s valuation, while trying to demonstrate it can generate more value as a standalone group. It has unveiled a raft of restructuring measures, including the listing of its North American business, a US$13bn buyback and the appointment of its first foreign chief executive, Stephen Dacus. However, Seven & i’s share price has yet to respond significantly to the moves, said analysts, and has fallen 10% so far this year, with the failure of a rival buyout plan by the company’s founding family denting investor confidence last month. The two groups recently began a broad search for a buyer of close to 2,000 of about 20,000 US stores they would own if combined. They believe the sale will be needed to satisfy competition regulators and have sent confidential memos to private equity groups, according to the FT.

Asia Markets Mixed

Asia-Pacific markets traded mixed Friday, due to uncertainty around the US economy. Japan’s Nikkei 225 fell 0.2% to 37,677, for a weekly advance of 1.7%. The broad-based Topix added 0.3% to its highest since last July in a seven-day winning streak. Japan’s headline inflation rose 3.7% year on year in February, easing from a two-year high of 4% seen in January. South Korea’s Kospi added 0.2%, taking its weekly gain to 3.0%. Australia’s S&P/ASX 200 traded 0.2% higher. It was up 1.8% for the week.

Shares of Mitsubishi Motors rose as much as 4.8%, before erasing gains, after reports that it is closing in on an EV collaboration deal with Taiwan’s Foxconn, according to Nikkei citing sources close to the matter. Discussions have been ongoing for over six months, sources were cited as saying.

Shares of South Korea’s largest defence group, Hanwha Aerospace, plunged 13% on Friday after it announced a Won3.6tn (US$2.5bn) offering to fund overseas expansion. Hanwha Aerospace shares have more than doubled in value so far this year on expectations of robust orders from European countries after President Donald Trump questioned Nato commitments. But they suffered their biggest decline since last August on Friday after the company said it would issue almost 6mn shares at Won605,000 apiece, 16% below the stock’s close on Thursday. The share sale is South Korea’s largest in more than three years.

South Korea has emerged as one of the world’s 10 biggest defence exporters on the bank of strong orders, especially from eastern European countries, since Russia’s full-scale invasion of Ukraine in 2022. Hanwha and tank producer Hyundai Rotem have become the top performers in the regional MSCI Asia Pacific index.

In India, the BSE Sensex index rose 0.7% to 76,906. It was the fifth straight day of gains taking the benchmark index to a six-week high. The index was up 4.2% over the week. Major Indian defence stocks climbed on Friday after the country’s defence council reportedly approved 540 billion rupees (US$6.25bn) worth of capital acquisition proposals. Hindustan Aeronautics, which makes fighter jets for the country, rose 1.9%, for a fifth straight day of gains. Munitions manufacturer Bharat Dynamic climbed 3.7%. The plan approved by India’s defence council covers more powerful engines for the army’s T-90 tanks, advanced torpedoes for submarines, as well as early warning aircraft, among others.

Indonesian Stocks Slump

The Jakarta Composite Index fell 1.9% on Friday, having been down as much as 2.6% earlier in the day. That comes after the stock market dropped over 7% at one stage on Tuesday, the most in three years and leaving it among the worst-performing stock gauges in Asia. The nation’s equities have seen net outflows of US$1.9 billion this year. President Prabowo Subianto has caused unease with his populist spending measures, plans to dilute the central bank’s independence and aggressive policies against foreign businesses like Apple. He also fast-tracked laws to expand the role of the military, triggering angry student protests in Jakarta.

The tipping point came earlier in the week, when rumours that Finance Minister Sri Mulyani Indrawati, who has kept a tight rein on spending during her cumulative 14 years in office, would resign. Bank Indonesia was forced to step in to protect the rupiah, Asia’s worst performing currency this year. The rupiah has weakened by more than 2.4% this year, as heightened global trade tensions also weigh on sentiment. The 10-year government bond yield rose 17 bps last week, the most since mid November, to 7.14%.

Prabowo’s policy steps since taking office in October could push the budget deficit closer to its legal limit of 3% of GDP. He implemented a free lunch programme for students, a signature campaign pledge, that will cost US$30 billion a year, the equivalent of 14% of Indonesia’s entire 2024 budget. To pay for that, he slashed spending in other areas, like infrastructure projects and travel.

The government delayed releasing monthly budget data for January, leading investors to question the state of the government’s finances. The figures were finally published last week, showing a surprise deficit as both revenues and expenditures plunged. None of that bodes well for Prabowo’s biggest pledge of all: boosting economic growth to 8%. Analysts say that goal is unrealistic, with the market consensus closer to 5% growth this year.

Hong Kong Shares Tumble

On Friday, Chinese equities extended their slide from a three-year high. Hong Kong’s Hang Seng Index tumbled 530 points, or 2.2%, to 23,690, dragged lower by healthcare and consumer cyclical stocks. Still, the city’s benchmark index is up over 18% year-to-date. The Hang Seng China Enterprises Index closed down 2.3%, taking its two-day drop to 4.6%, the steepest since October 9. Technology shares bore the brunt of the selling. The Tech Index slumped 3.4%, trimming this year’s gain to 26%. The Tech Index trades at a 6.3% discount to the US “Magnificent Seven” stocks on a valuation basis, compared with a 50% gap in December, according to Bloomberg data. Mainland China’s CSI 300 fell 1.5% to 3,915. The index has relinquished its gains for the year and is now down 0.5% in 2025.

The largest loser on the HSI was electric vehicle maker BYD, which saw a loss of 7.7% on Friday, before results due this week. Other names in the top losers list included Chinese chip company Semiconductor Manufacturing International Corporation (SMIC), which lost 7.5%, and pharmaceutical company WuXi Biologics, falling 4.7%. This week, companies including China’s biggest banks and consumer firms are due to report their results.

Profit-taking pressure is rising on Hong Kong-listed tech stocks following their earnings, Alvin Ngan, an analyst at Zhongtai Financial International, wrote in a note. “The valuation gap between Chinese and US tech stocks has significantly narrowed after a correction in US stocks.” Bearish calls have emerged, with BofA Securities warning of a “meaningful correction soon” and Morgan Stanley seeing volatility ahead, as the market has priced in positives from the National People’s Congress.

Shares of CK Hutchison Holdings, the conglomerate controlled by the Li Ka-shing family, tumbled 3.6% after reporting a 27% profit decline last year. Its affiliate CK Asset Holdings lost 5.8% after annual net income dropped 21%. Henderson Land shed 1.7% after posting a 32% decrease in profit.

Pressure Increases On CK Hutchison Over Panama Ports Deal

A pro-Beijing newspaper has called on CK Hutchison to pull out from the sale of ports on the Panama Canal to a BlackRock-led group, marking an escalation of a pressure campaign on billionaire Li Ka-shing over the deal. The transaction will damage China’s national security and development interests, which directly violates Hong Kong’s laws on safeguarding national sovereignty, security and development interests, the Ta Kung Pao paper said in a commentary. The Panama Canal is “of great significance to China’s national interests,” Ta Kung Pao said. As the second largest user of the waterway, China’s foreign trade stability and logistics costs are directly affected by its operation, it said. The sale of the two Panama ports may lead to an increase in logistics costs of Chinese companies and threaten the long-term development of China's manufacturing industry and foreign trade.

CK Hutchison is expected to sign an agreement on the sale of the ports by April 2. It’s the key part of a wider deal to offload 43 facilities outside of Hong Kong and mainland China for more than US$19 billion in cash proceeds. Donald Trump has hailed the sale as winning back control of the waterway from Chinese influence.

So far, Chinese officials haven’t explicitly given the 96-year-old Li and his firm any demands or instructions. But if Beijing does decide to take a tougher approach, it could raise concerns that sweeping national security laws imposed on Hong Kong since 2020 might ensnare businesses’ assets and operations.

Turkish Stocks & Currency Plunge

The Turkish lira notched its steepest weekly drop in nearly two years and stocks plunged as an emergency interest-rate increase failed to halt the currency’s retreat amid mounting political tensions. The detention of a key opposition politician rattled investors last week, sending markets into a nosedive and prompting action from the central bank to stop locals from switching their savings into dollars. The benchmark Borsa Istanbul 100 Index slumped 7.8% Friday, triggering circuit breakers. That follows a decline of 8.3% on Wednesday, which takes the weekly retreat to almost 17%, erasing about US$30 billion from the value of the Turkish equity market in the biggest weekly decline since 2008.

The sudden lira slump was triggered by the detention of Istanbul mayor Ekrem Imamoglu. The lira fell about 3% last week, after briefly touching a record low against the dollar on the day of Imamoglu’s arrest. The Turkish central bank raised its overnight lending rate 200 bps to 46% at a surprise meeting Thursday to stop the currency retreat, and local banks sold about US$8 billion to defend the lira. The lira’s slide resumed Friday and local two-year bond yields climbed for the fifth day. MSCI warned it may be forced to strip the nation’s stocks of their emerging-market status. Market bets on Turkey’s creditworthiness also deteriorated on Friday, as the price of five-year default protection on the country’s bonds rose above 320 bps, up from about 250 bps a month ago.

European Markets Hit By London Heathrow Airport Closure

European stock markets closed lower on Friday, with travel stocks leading the losses. European investors were also digesting monetary policy updates that came from multiple central banks in the region, as well as the US Federal Reserve, last week. The pan-European Stoxx 600 was down 0.6%. The index, which is up 8.3% since the beginning of the year, posted a weekly gain of 0.6%. London’s FTSE 100 was 0.6% lower. But it was up 0.2% for the week.

Market watchers in Europe are abandoning caution and chasing the stock market rally. Almost half the strategists in a monthly Bloomberg survey have raised their forecasts for the Stoxx Europe 600 Index since last month, when about two thirds of strategists were expecting downside ahead.

The travel and leisure sector shed 1.6% after London’s Heathrow Airport closed on Friday following a fire at a nearby electrical substation which affected hundreds of flights from all over the world. British Airways owner International Airlines Group fell 1.9%. EasyJet was down 0.9%. Lufthansa was 1.7% in the red. Air France was down 2.7%. Intercontinental Hotel was trading 2.5% lower.

The drop in Nike shares on Wall Street had a spillover effect in Europe. Retailer JD Sports, a Nike partner, fell 5.1%. JD Wetherspoon slid 9.4% in London, hitting a two-year low, after the pub chain reported weaker-than-expected earnings, fuelling concerns about the strength of UK consumers. Asos jumped 18.4% in London, their best day in nearly five years, after the online fashion retailer reiterated it expects a “significant improvement” in profitability in the first half.

Germany’s plan to free up hundreds of billions of euros for defence and infrastructure cleared its final legislative hurdle. Lawmakers in parliament’s upper house approved the reforms to the so-called “debt brake” Friday in a major win for Chancellor-in-waiting Friedrich Merz. But the debt-funded plan, which allows for de-facto unlimited spending on defence and security, is also sending shock waves through European financial markets, with bond yields in Italy, Spain, Greece and Portugal rising rapidly. Yields on benchmark Italian, Greek, Spanish and Portuguese bonds have risen 30 bps since the start of the month. The four countries have some of the highest debt loads on the continent, making them vulnerable to higher interest rates. The risk is not limited to the periphery, as debt levels in France and Belgium have also increased, and a rise in German bund yields could lead to a widening of interest-rate spreads and greater financing burdens for other parts of Europe.

US Stocks Snap 4-Week Losing Run

US stocks snapped a four-week losing streak on Friday as the S&P 500 clawed back some of its losses from earlier in the session driven by a flurry of weak corporate earnings. The S&P 500 added 0.1% to 5,668. The index erased a slide that earlier topped 1%. The Dow advanced 32 points, or 0.1%, to close at 41,985. The Nasdaq Composite gained 0.5% and settled at 17,784.

A rally among several tech giants spurred the late day rebound. Tesla led gains in megacaps, rising 5.3%. But its shares are down more than 40% this year. Microsoft rallied in the last 10 minutes of trading to avoid its first eight-week losing streak since 2008. The stock was up 0.7% for the week but is still down 7% in 2025. However, Nvidia fell 0.7% Friday taking its loss for the year to almost 14%. Meta Platforms is the only Magnificent Seven stock in positive territory for 2025, with a slim year-to-date gain of 1.8%. A massive expiration of options added an extra dose of volatility, with over 21 billion shares changing hands on US exchanges, the most in 2025.

The broad-based S&P 500 posted a 0.5% weekly advance, averting a fifth straight week of losses. The Nasdaq rose 0.2% over the week, and the Dow posted a 1.2% gain. Stocks have been rocked in recent weeks by concerns about the economic fallout from US President Donald Trump’s aggressive tariff policies, as well as a sell-off in the previously high-flying tech sector, pulling the S&P into correction territory. A rebound earlier in the week after the Federal Reserve kept interest rates on hold but signalled openness to reductions later in the year proved short lived.

Trump’s tariff deadline is looming over the market, according to Michael Green, chief strategist at Simplify Asset Management. “Companies are increasingly citing confusion and uncertainty around their planning and capital spending and hiring decisions and when they pause, it means that they’re slowing down,” he said. “There’s an element of that playing out in the markets.”

A JPMorgan model portfolio tracking retail’s money flows in the market shows they’ve lost 7% of their capital this year as they attempt to buy the dips. That’s about double the S&P 500’s decline. The dip buying has been punishing this year because bounces in the stock market have failed to hold. Market watchers keep a close eye on retail traders as they are often the last to cut their exposure to stocks, so the latest bout of aggressive buying from mom-and-pop investors may suggest that equities haven’t found the bottom yet.

Reduced earnings forecasts by economy sensitive stocks such as FedEx and Nike also weighed on sentiment. FedEx lowered its profit guidance for a third straight quarter as inflation and uncertain demand for shipments squeeze the parcel company’s bottom line. FedEx blamed persistent “weakness and uncertainty in the US industrial economy”. The stock was down 6.5%.

Nike is also feeling the effects of a growing trade war. The sneaker maker signalled further declines in revenue and profitability and warned a global trade war and consumer caution were complicating its efforts to boost sales as part of a turnaround. Nike shares were down as much as 9.3% in Friday morning trading, falling to their lowest level in five years and taking the group’s market capitalisation below US$100bn. The shares recovered slightly in the afternoon session to close 5.5% lower.

Shares in Lennar fell 4.0% after America’s second-largest homebuilder warned that “persistently high interest rates and inflation” combined with a downturn in consumer confidence and a limited supply of affordable properties had “made it increasingly difficult for consumers to access home ownership”.

Treasury Yields Down Over Week

Treasury yields rose slightly Friday but were down for the week. The yield on the 10-year bond rose 1 bps to 4.25%. For the week, the yield was 7 bps lower. The yield on the 10-year Treasury has declined in seven of the past eight weeks. The 2-year yield ended the session at 3.95%, a decline of 1 bps on the day and 7 bps over the week.

US Dollar Rises For Third Day

The US Dollar Index climbed 0.3% to 104.15 on Friday, rising for the third consecutive session as investors continued to assess the Federal Reserve's monetary policy stance. On Wednesday, the Fed kept policy unchanged but signalled two interest rate cuts this year. The central bank also highlighted rising risks to growth, employment, and inflation in its latest economic projections.

The Japanese yen slipped 0.4% to ¥149.31 per dollar on Friday, snapping a two-day advance as investors reacted to the latest inflation figures. Japan’s core inflation rate slowed to 3% in February from 3.2% in January but still exceeded forecasts of 2.9%. The offshore yuan depreciated 0.1% past Rmb 7.25 per dollar on Friday, hitting its lowest level in over a week, mainly due to a strengthening US dollar.

Gold Retreats From Record High Amid Stronger Dollar

Spot gold prices declined 0.7% to $3,022 an ounce on Friday, weighed down by a stronger US dollar and profit-taking. Over the last five trading days, the precious metal rose 1.3%, a third consecutive weekly gain, supported by persistent geopolitical tensions and expectations of US Federal Reserve rate cuts. As a traditional safe-haven asset, gold has notched 16 record highs this year, reaching an all-time peak of $3,057 per ounce on Thursday. For the year, bullion has risen over 15%.

Oil Advances For Second Week

Brent crude oil futures fell 0.2% to close at $72.16 per barrel on Friday. For the week, oil rose 2.2%, the second consecutive weekly gain. This uptick was fuelled by new US sanctions on Iran and a fresh OPEC+ plan for seven members to cut output. The US Treasury imposed sanctions targeting Chinese refineries and vessels involved in importing Iranian crude, intensifying Washington's "maximum pressure" campaign to drive Iran’s oil exports to zero. Analysts predict that tighter sanctions will reduce Iranian exports by 1 million barrels per day. Oil prices were further supported by OPEC+'s plan to implement additional output cuts between 189,000 and 435,000 barrels per day until June 2026, effectively counterbalancing planned production increases. This strategy is expected to stabilize the market and offset OPEC+'s previously announced supply hikes beginning in April.

Bitcoin Flat

Bitcoin ended Friday and the week flat at $84,180. Year-to-date, the cryptocurrency is down 10%.

Peter Lewis’ Money Talk Podcast

On Monday’s “Peter Lewis’ Money Talk” podcast, I’ll be joined by Alex Wong, director at Alex KY Wong Asset Management and Mark To, Managing Director of Asset Management at the Wing Fung Financial Group. In the second part of the show, Lawrence Iu, Executive Director at Civic Exchange discusses how Hong Kong can achieve its climate goals.

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