Headlines/Economic Data
General Trend: Asian equities trade mixed following tightening measures out of the US Fed and PBoC
Chip-related companies trade generally higher: Taiwan Semi +1%, Samsung Electronics +1.5%
A$ and Australian bond yields rise on better than expected employment data
Heavy data session for China
European rate decisions coming up
China and HK Airline names higher on oil prices
Japan
Nikkei 225 opened -0.3%, closes -0.3%
Mega banks track earlier weakness in US financials: Mitsubishi UFJ -2%, Mizuho Financial -1.7%, Sumitomo Mitsui -1.5%
Telecom names decline as Rakuten confirms plans to enter mobile network business; Rakuten -3%, KDDI -1.8%, Docomo -1%, Softbank -2.8%
JAPAN DEC PRELIM PMI MANUFACTURING: 54.2 V 53.6 PRIOR
Japan govt may project ¥1T tax revenue boost in FY18 – Nikkei
Japan MoF sells ¥1.0T v ¥1.0T indicated in 0.6% in 20-yr JGBs; avg yield 0.573%; bid to cover 4.56x
(JP) Nikkei poll of business leaders shows that majority of respondents said they will or are likely to spend more on personnel in FY18
Japan Govt will revise up its FY18 real GDP growth forecast to 1.8% (prior 1.4%) due to recovery in external demand along with capital spending and private consumption; FY17 estimate of 1.5% is also likely to be upgraded; Expected that figures will be approved at next week’s Cabinet meeting.
Looking ahead: BoJ Tankan survey due for release on Friday.
Korea
Kospi opened +0.2%, later extended gains
Samsung Electronics +1.5%
LG Electronics +5% (amid positive broker commentary)
Banks add onto Wednesday’s gains: Woori Bank +2.5%, Shinhan Financial +1.8%
Bank of Korea Gov Lee: No significant market impact from Fed rate hike
South Korea Vice Fin Min Hyoung-Kwon: Korea market anxiety over FOMC rate hike isn’t big; Great uncertainty regarding pace of US tightening; Korea to prepare for US tightening with preemptive steps
(KR) South Korea will supply 1M registered private rent houses over the next 5-yrs – Korean press
(CN) China MOFCOM: China to strengthen economic and trade cooperation with South Korea
Looking ahead: South Korea Nov Trade Balance due for release on Friday
China/Hong Kong
Hang Seng opened +0.4%, Shanghai flat
Hang Seng Property Index +1%; China Nov home sales hit 5-month high
Hang Seng Materials Index +1.2%, Financials Index -0.3%
Hang Seng Consumer Goods Index +0.8%: CHINA NOV RETAIL SALES Y/Y: 10.2% V 10.3%E; YTD Y/Y: 10.3% V 10.3%E
PBoC raised rates connected to open market operations (OMO) and medium-term lending facility (MLF) after US Fed rate hike
(CN) PBoC commented on its rate moves: Said OMO rate hike reflects market supply and demand; Normal reaction to Fed rate increase; OMO rate hike to ease market distortion; Interest rate adjustment was less than market expectation
(CN) China former PBOC economist: monetary policy should move toward tight bias; OMO rate hike warns speculator – Xinhua
(HK) Hong Kong Monetary Authority (HKMA) raises base rate by 25bps to 1.75%, inline with US Fed move: ***Insight: Because the HK$ is pegged to the USD Hong Kong generally follows the Fed’s moves.
(CN) China State Council: China will step up supervision over state assets and SOEs with differentiated regulatory policies for state firms and more emphasis on overseas projects
(CN) China Banking Regulatory Commission (CBRC) Fan Wenzhong: Will steadily advance liberalization of the banking industry following the latest government move to widen foreign access to the financial sector
(HK) Hong Kong Monetary Authority (HKMA) Chan: This is an abnormally low rate environment for mortgages; Home price can’t be divorced from purchasing power
(CN) China MOFCOM: Hopes US tax cuts ‘worries’ won’t materialize
USD/CNY (CN) PBoC sets yuan reference rate at 6.6033 v 6.6251 prior (highest fix since Nov 23rd)
(CN) PBOC Open Market Operations (OMO): injects CNY50B v CNY130B prior in 7 and 28-day reverse repos v skips prior; Net drains CNY190B v injects CNY60B prior; raises yield on 7-day reserve repo to 2.5% from 2.45%; 28-day yield to 2.8% from 2.75%
(CN) PBOC LENDS CNY288B V CNY188B PRIOR IN MEDIUM-TERM LENDING FACILITY (MLF); OFFERS 1-YEAR LOANS AT 3.25% V 3.20% PRIOR
(CN) CHINA NOV INDUSTRIAL PRODUCTION Y/Y: 6.1% V 6.1%E ; YTD Y/Y: 6.6% V 6.6%E
(CN) CHINA NOV YTD URBAN FIXED ASSETS Y/Y: 7.2% V 7.2%E; NBS said fixed-asset investment slowing and steadying
(CN) China Nov Foreign Direct Investment (FDI) CNY124.9B, +90.7% y/y; YTD CNY803.6B, +9.8% y/y
(CN) Jan-Nov Outbound Direct Investment (ODI) $107.8B, -33.5% y/y
(CN) China MOFCOM: Notes ‘irrational’ ODI was been effectively curbed; no new ODI in property, sports and entertainment.
Chinese officials comment on taxes amid proposed US tax reforms
(CN) China National Bureau of Stats (NBS): Companies in China see heavy tax burden, there is room for China to further cut taxes and fees; Sees ‘necessity’ to further tackle tax burdens.
(CN) China MOFCOM: Hopes US tax cuts ‘worries’ won’t materialize; no new ODI in property, sports and entertainment; Hopes US can fulfill promise to create stable environment for investors from other countries including China; hopes US will not set obstacles for investors during assessment of deals; Encourages domestic companies to import natural gas
China Conglomerate HNA Group: Strength in share price and US dollar denominated bond prices comes amid speculation regarding financing talks
Australia/New Zealand
ASX 200 opened +0.1%, closes -0.1%; Energy Index +0.7%, Materials +0.6%; REIT Index -0.7% (outperformed on prior session, higher interest rates)
Refiner Caltex Australia +3%: Australia competition regulator to oppose Woolworth’s sale of service stations to BP (A$1.79B transaction)
Department Store Myer Holdings -8% (cautious H1 guidance)
Aussie extends gains to 1-month high amid employment data and Nov Chinese data
Aussie 3-year bond yield rises over 5bps following employment data
(AU) AUSTRALIA NOV EMPLOYMENT CHANGE: 61.6K V +19.0KE; UNEMPLOYMENT RATE: 5.4% (near 5-year low) V 5.4%E; Participation Rate: 65.5% v 65.1%e (matches highest reading since Sept 2011)
(AU) Australia Dec Consumer Inflation Expectation: 3.7% v 3.7% prior(
(NZ) New Zealand Treasury half-year economic and fiscal update: keeps 2017/18 bond program unchanged at NZ$7.0B; Cut 2017/18 and 2018/19 GDP growth forecasts; raised 2018 CPI forecast; Sees smaller budget surpluses in coming years
WOW.AU ACCC to oppose BP’s purchase of Woolworth service stations; -0.6%
MYR.AU Guides H1 adj Net materially lower y/y; profit and sales deteriorated in recent weeks; -7.6%
Other Asia
(MY) World Bank raises Malaysia 2017 GDP growth forecast to 5.8% from 5.2%; sees 2018 GDP growth at 5.2%
Looking Ahead: India Nov Wholesale Price Index (WPI) due for release later today
North America
US equities ended mostly higher: Dow +0.3%, S&P 500 -0.1%, Nasdaq +0.2%, Russell 2000 +0.6%
S&P 500 Consumer Staples Sector +0.6%; Financials -1.2%
FED: (US) FOMC RAISED TARGET RATE RANGE 25BPS TO 1.25-1.50% (AS EXPECTED); Vote 7-2 (Evans and Kashkari dissent); Confirms average Fed official looking for 3 hikes in 2018
(US) FOMC UPDATED ECONOMIC FORECAST FOR DEC MEETING (V. SEPT); Cuts midpoint of 2017 Core PCE inflation forecast to1.5% (prior 1.5-1.6%), Cuts 2018 Core PCE forecast to 1.7-1.9% (prior 1.8-2.0%)
(US) Fed Chair Yellen: seen pickup in economic growth and business investment, as well as improvement in economies abroad – post FOMC decision comments; Fed did discuss tax policy, most of colleagues did put fiscal stimulus into projections
Tax Reform: (US) House and Senate leaders said to have reached an agreement in principle on tax reform bill – press
(US) Sen Finance Chair Hatch (R-UT): confirmed GOP has reached deal on tax legislation; confident there are sufficient votes to passed agreed-upon deal
M&A: 21st Century Fox: Reportedly Disney deal to value Fox at just over $40/shr, paying up to $29/shr for Fox assets – press
Energy: (US) DOE CRUDE: -5.1M V -3ME
Looking Ahead: US President Trump to update on deregulation efforts on Thursday, US Nov Retail Sales due
Europe
(UK) UK govt loses vote on EU withdrawal bill amendment by 309-305; House of Commons votes to give lawmakers final say on Brexit deal – press; Marks the first time PM May has lost a vote in the Commons on her Brexit plans
(DE) German DIHK Chambers of Commerce: Brexit may raise Germany EU cots by €8B/year – US financial press
(UK) Nov RICS House Price Balance: 0% v 0%e
M&A: Gemalto: Atos confirms its proposed all-cash public offer at a price of €46.0 per Gemalto share (Follows the offer being rejected)
Shell: Reportedly to sell Agentina downstream assets to Raizen for $1B – press
Norske Skog [NSG.NO]: Appointed Evercore Partners to act as its financial adviser in connection with a sale of Norske Skog AS and its subsidiaries by way of a competitive sale process which will commence imminently
Looking ahead: European rate decisions due later today from SNB, ECB and BoE, along with EZ Prelim DEC PMI data, UK Nov Retail Sales and IEA Monthly report
Levels as of 01:00ET
Nikkei225 -0.3%, Hang Seng -0.5%; Shanghai Composite -0.5%; ASX200 -0.2%, Kospi +0.7%
Equity Futures: S&P500 0.0%; Nasdaq100 0.0%, Dax +0.1%; FTSE100 -0.0%
EUR 1.1843-1.1822; JPY 112.79-112.53; AUD 0.7675-0.7628;NZD 0.7024-0.6997
Feb Gold +0.9% at $1,260/oz; Jan Crude Oil +0.2% at $56.70/brl; Mar Copper -0.5% at $3.04/lb