Positive news seen on the tariffs front

Asia Market Update: TECH stronger in early 2026 amid multiple pieces of good news; Positive news seen on the tariffs front; South Korea and Taiwan PMIs move into expansion.

General trend and developments

- Hang Seng TECH index rallies by 3%; Similar gain seen for Samsung [Rises by ~4% after CEO comments on HBM4, due to report Q4 prelim earnings next week].

- US equity FUTs have quiet start to 2026: Nasdaq FUTs +0.1%, S&P 500 FUTs +0.1%; Equities FUT later accelerated gains led by Asia TECH amid positive news.

- TECH News: The global AI IPO race continues; Baidu [9888.HK]: Confirms submission of HK IPO application for AI chip unit Kunlunxin; China AI-chipmaker Biren 'soars' in HK debut – Nikkei [https://asia.nikkei.com/business/markets/ipo/chinese-ai-chipmaker-biren-soars-on-trading-debut].

- Taiwan SEMI [TSM]: US Dept of Commerce grants TSMC Nanjing an annual export license for controlled items – press [from Dec 31st 2025].

- OpenAI said to give orders to Hon Hai instead of Chinese co. Luxshare [unclear if the development is related to trade] - Taiwan Press.

- Hang Seng Auto Index rises >2.0%, follows Dec EV sales figures.

- Tariffs: (IT) US retreats from Trump pasta tariffs on Italy - FT ; President Trump also signed a Proclamation invoking Section 232 of the Trade Expansion Act of 1962 (Act) to delay increases in tariffs for upholstered furniture, kitchen cabinets, and vanities for another year [cited productive trade talks];

- Year-end liquidity: (US) Financial firms borrowed $74.6B [record] from NY Fed SRF amid year-end liquidity needs [from Dec 31st 2025]

- US 30-year Treasury FUTS decline (-0.4%); Aussie yields rise by 3-5bps.

- PMI Highlights: Taiwan: Output and new orders both rise for first time since March; To sustain the upturn, we need to see further improvements in demand - particularly from overseas; reports of material shortages.

- South Korea PMI: Strongest rise in new orders since November 2024; According to manufacturers, new product launches and improved external demand drove the improvement in sales; The inflation picture was less positive, however, with the rate of input cost inflation accelerating markedly in December amid higher raw material prices and exchange rate weakness.

- Bank of Korea (BOK) Gov Rhee: Weak Korean Won (KRW) may hurt domestic businesses more and increase inflationary pressure; USD/KRW at high 1,400 seems far from economic fundamentals.

- Notes/desk observations: US equity FUTs moved gradually higher in Asia with Tokyo still closed [TECH leads] Precious metals rise, after volatile start to last week; USD/JPY chart reflects the holiday in Japan; Middle East tensions ignored thus far.

- Mainland China markets remain closed [Reminder from Dec 28th 2025: China PBOC to issue "Digital Yuan Management Action Plan", effective from Jan 1st, 2026; China to pay interest on digital yuan – statement].

- CNH rises to the highest level since May 2023 amid Mainland holiday; AUD/USD tracks rise in yuan.

- HK Money Markets: 1-week HIBOR declines the most since May 2025 amid the start of the new year and Mainland China holiday.

Looking ahead (Asian-weighted focus, using Asian time zone)

- Australia Nov CPI due on Jan 7th (Wed); Japan wage data also due; Vietnam to release GDP.

-Fast Retailing and Seven & I to report results.

-TTN Early 2026 risk radar includes: US jobs report on Friday; Pending Supreme Court decision window on IEEPA legality, Trump’s Fed Chair pick, and the Fed’s Miran term ending Jan 31 could reprice policy uncertainty, while earnings season from mid-Jan will test AI and macro narratives against real margins and demand. Other near-term catalysts: OpenAI’s Jan model drop and a potential Oracle jumbo ~$38B debt offering, plus the Jan 30 US government funding deadline, create a tight cluster of headline and liquidity risk into month-end.

Headlines/economic data

Australia/New Zealand

-ASX 200 opened -0.1% at 8,705.

-Australia Dec Cotality Home Value M/M: 0.5% v 0.9% prior.

-New Zealand: China beef safeguards Unlikely to restrict exports [from Dec 31st 2025] (*Reminder Dec 31st: (CN) China MOFCOM announced ruling on probe of imported beef; To take measures from 2026 and impose 55% of additional tariffs on certain beef imports for three years; Tariffs will be levied on top of the current applicable tariff rate, and the additional tariff rate is 55%).

China/Hong Kong

- Hang Seng opens +0.3% at 25,717.

- Shanghai Composite closed for holiday.

-BYD [1211.HK]: Reports Dec vehicle unit sales 419.8K, +5.4% y/y, production 420.4K, +7.7% y/y.

-Li Auto [LI]: Reports Dec Vehicles Delivered 44.2K units v 33.2K m/m.

-Nio [NIO]: Reports Dec Vehicles Delivered 48.1K, +54.6% y/y.

-Xpeng [XPEV]: Reports Dec Vehicles Delivered 37.5K, +2% y/y.

-US President Trump to meet with US Ambassador to China Perdue on Fri at 6:30 PM [ET] (reason not initially disclosed) - US financial press.

-China President Xi to meet with South Korea counterpart Lee on Jan 5th; cites South Korea Blue House; Both countries are preparing certain MOU deals.

- (CN) China trade-in drive hit CNY2.6T (~$370B) in 2025 - Press.

Japan

-Japan markets are closed for holiday.

-(JP) Major business groups in Japan said to hope for stronger Yen in 2026 amid concerns about higher import costs – Nikkei.

South Korea

-Kospi opens +0.2% at 4,224 [record high].

-South Korea Dec PMI Manufacturing: 50.1 v 49.4 prior [1st expansion in 3 months].

-South Korea Dec Trade Balance: $12.2B v $10.0Be.

-South Korea Fin Min Koo: Global environment likely 'challenging' in 2026; South Korea sold net $1.75B to curb FX volatility in Q3 - financial press [from Dec 31st].

- Bank of Korea (BOK) Gov Rhee: Weak Korean Won (KRW) may hurt domestic businesses more and increase inflationary pressure; USD/KRW at high 1,400 seems far from economic fundamentals [Reminder from Dec 17th 2025: South Korea Vice Fin Min: Sees herd behaviors in the markets].

-Samsung Electronics [005930.KR] CEO: HBM4 demonstrates differentiated competitiveness [*Reminder Dec 21 2025: Reportedly Samsung's HBM4 chips have posted the highest score in Nvidia tests - Korean press; Sources report the HBM4 chips scored top marks in tests for NVIDIA's "Vera Rubin" AI accelerators, showing superior speed (over 11Gbps) and power efficiency].
Celltrion [068270.KR]: Rises by 10% on contract award from Lilly.

-South Korea financial regulator [FSS] is seeking more tight oversight of major retail platforms; the remarks are believed to be aimed at Coupang - Yonhap.

Other Asia

-Malaysia Dec PMI Manufacturing: 50.1 v 50.1 prior [2nd month of expansion].

-Taiwan SEMI [TSM]: *US Dept of Commerce grants TSMC Nanjing an annual export license for controlled items - press [from Dec 31st 2025].

- Indonesia state banks in focus amid report of diverted cash placement by the government - US financial press.

-Indonesia Dec PMI Manufacturing: 51.2 v 53.3 prior [5th month of expansion].

- (PH) Philippines Dec PMI Manufacturing: 50.2 v 47.4 prior [moves back into expansion].

-SINGAPORE Q4 ADVANCE GDP Q/Q: 1.9% V 2.7%E; Y/Y: 5.7% V 6.4%E.

-Taiwan Dec PMI Manufacturing: 50.9 v 48.8 prior [1st expansion in 10 months].

-Vietnam Dec PMI Manufacturing: 53.0 v 53.8 prior [6th month of expansion].

-Vale Indonesia [INCO.ID] Notes temporary suspension of mining operations on delay for 2026 work plan.

-Weakness in tobacco stocks in India attributed to new tax in New Delhi - Local press.

North America

- US President Trump: signed a Proclamation invoking Section 232 of the Trade Expansion Act of 1962 (Act) to delay increases in tariffs for upholstered furniture, kitchen cabinets, and vanities for another year.

- Venezuela President Maduro: The country's defense system 'intact' after alleged US attack.

Europe

-US retreats from Trump pasta tariffs on Italy - FT.

- Ireland Dec PMI Manufacturing: 52.2 v 52.8 prior (12th month of expansion).

- (FI) Finland Police: Seized vessel suspected of cable sabotage sailed under St Vincent and Grenadines flag.

-(IR) Several reportedly have been killed in Iran protests - financial press.

-(YE) Yemen Aden airport shuts amid rift between Saudi Arabia and the UAE - financial press.

Levels as of 00:20 ET

- Nikkei 225 closed ; ASX 200 +0.2% ; Hang Seng +2.4% ; Shanghai Composite closed; Kospi +1.6%.

- Equity S&P500 Futures +0.5%; Nasdaq100 +0.7%; DAX -0.1%; FTSE100 flat.

- EUR 1.1764-1.1745-; JPY 156.88-156.51; AUD 0.6702-0.6667 ; NZD 0.5771-0.5747.

- Gold +0.7% at $4,393/oz; BTC +1.1% at $88.6K; Crude Oil +0.1% at $57.56 bbl; Copper +0.8% at $5.7585/lb.