Headlines/Economic Data
General Trend: Asian equities opened higher following Friday’s gains in the US, amid optimism related to tax reform
CME Bitcoin Futures opened at $20,650 and traded ~80 contracts in the first 15 minutes of trading
Japan
Nikkei 225 opened +1%; closed +1.6%
Financials track Friday’s gains in the US: Mitsubishi UFJ +2.7%, Sumitomo Mitsui +1.6%, Mizuho +1.6%
Japan pension fund GPIF said to consider absorbing the costs of negative interest rates – Japanese Press
Toyota +2.7% (seeking to sell more than 5.5M e-vehicles)
Tokyo Steel: -2.6% (follow-through selling; announced plans to raise steel prices for Jan)
JAPAN NOV TRADE BALANCE: ¥113.4B V -¥40.0BE; ADJ ¥364.1B V ¥265BE; Exports y/y: 16.2% (12th straight rise) v 14.7%e; Imports y/y: 17.2% v 18.0%e
Japan BOJ Tankan Dec survey of all firms inflation expectations: Raises 1-yr 0.8% y/y (prior 0.7%); Affirms 3-yr 1.1% y/y; Affirms 5-yr 1.1% y/y
Japan govt reportedly planning FY2018/19 annual general account budget spending at ¥97.7T, a record level – press
Japan Fin Min confirms FY18 budget assumes record low interest rate of 1.1% – Japanese Press (in line with press speculation from Dec 12th)
Japan is expected to approve its budget draft on Friday, Dec 22nd
Looking ahead: 10-year JGB auction due to be held on Tuesday; The BoJ is due to hold its two-day policy meeting on Dec 20-21st (Wed and Thursday)
Korea
Kospi opened +0.3%, has since pared gains
Steelmakers decline: Posco -1.9%, Hyundai Steel -3.7%
Financials trade generally lower: Woori Bank -0.8%, KB Financial -1.3% Shinhan Financial -0.2%
Kakao Corp -3% (to list shares in Singapore)
South Korea sells 20-yr Govt bond at 2.405%
Bank of Korea (BOK) sells KRW400B in 6-month monetary stabilization bonds at 1.66%
South Korea is monitoring North Korea in relation to its cryptocurrency moves; **Note: On Dec 15th, South Korea’s Yonhap reported that North Korea was linked to cryptocurrency hacking that occurred in Sept.
(KR) South Korea President Moon’s Economic Advisor to meet with 8 largest companies in the country
China/Hong Kong
Shanghai Composite opened +0.1%, Hang Seng +0.3%
Hang Seng Materials Index +0.9%
(CN) China Ministry of Finance: To lower import taxes on products including cathode materials for power batteries, raw materials for advanced medicine, dobby or jacquard looms and coconut fibre; Export duties on steel and chlorite to be scrapped, effective Jan 1st
(CN) China Former PBoC Economist Ma proposed removing GDP target – Chinese Press
(CN) China NDRC issues guidelines on overseas investments by private companies; Asks companies to increase risk control, set up contingency plans, improve safety measures
(CN) China to offer tax cuts to state-owned enterprises (SOEs) related to environmental protection and public infrastructure
(CN) President Trump national security strategy said to accuse China of “economic aggression”, labeling it as a competitor and a threat – financial press; This would be the most aggressive economic response to China since 2001.
(CN) Wind data shows in 2017 China completed 4,018 M&A deals worth CNY1.51T v 2,998 deals with value of CNY1.7T y/y – Xinhua
PBoC raised the yield on 28-day reverse repo by 5bps; (**Note: Following last Wednesday’s Fed rate hike, the PBoC raised interest rates on its 7-day and 28-day reverse repo operations by 5bps. It also raised the rate on its 1-year medium-term lending facility by 5bps)
PBoC OMO: CNY300B in 7,14 and 28-day reverse repos v CNY150B injected in 7 and 28 day reverse repos prior; Net injected CNY260B v CNY150B prior
(CN) CHINA NOV PROPERTY PRICES M/M: RISES IN 50 OUT OF 70 CITIES V 50 PRIOR; Overall new home prices m/m: +0.3% v 0.3% prior; y/y: 5.1% v 5.4% prior
(CN) PBoC does not need to follow US to raise interest rates – China Daily
(CN) PBoC sets yuan reference rate at 6.6162 v 6.6113 prior
(CN) Reminder today is the first day of Central Economic Conference held from 18th to 20th
(CN) PBoC does not need to follow US to raise interest rates – China Daily
Australia/New Zealand
ASX 200 opened -0.2%; closed: Resources index +0.8%, Financials +0.6%, banks recovered amid a favorable move in yields
(AU) Australia Govt 2017/18 Mid-Year Economic & Fiscal Outlook Australian government 2017/18 Mid-Year Economic & Fiscal Outlook: Cuts 2017/18 GDP at 2.5% from 2.75% in May; Affirms 2017/18 CPI 2.0%; Cut wage growth forecasts for 2017/18 and 2018/19
(AU) Australia Treasurer Morrison: Commitment to corporate tax cuts remains unchanged; do not see upside risks to GDP growth forecasts
(AU) Moody’s: Affirms Australia AAA sovereign rating; Outlook Stable
(AU) RBA releases paper: Monetary Policy and Financial Stability in a World of Low Interest Rates
(NZ) New Zealand Nov Performance of Services Index: 56.4 v 55.6 prior
(NZ) New Zealand Dec ANZ Consumer Confidence Index: 121.8 v 123.7 prior; m/m: -1.5% v -2.1% prior
ACX.AU To be acquired by Oracle for A$7.80/shr in cash; +44%
RAP.AU Announces further positive results from Australian adult clinical studies; +30%
Looking ahead: Reserve Bank of Australia (RBA) Dec meeting minutes due on Tuesday, along with New Zealand Q4 Westpac Consumer Sentiment and ANZ Dec Business Confidence
Other Asia
(IN) Indian assets opened sharply lower amid close elections in the Gujarat State; Equities later pared losses amid indications that PM Modi’s BJP Party is expected to win
(SG) SINGAPORE NOV NON-OIL DOMESTIC EXPORTS M/M: 8.7% V 0.6%E; Y/Y: 9.1% V 6.4%E; ELECTRONIC EXPORTS Y/Y: 5.2% V 5.2%E
North America
Tax Reform: (US) Senator Rubio (R-FL): Confirmed he would now support the tax bill (comments from Dec 15th)
(US) Sen Corker (R-TN): will support GOP tax reform bill (comments from Dec 15th)
(US) Spokesperson for US Senator McCain (R): Senator to return to D.C in Jan (to miss Senate vote on tax bill)
(US) The White House and Senate Majority Leader McConnell are said to have been planning for the possibility that McCain might miss the tax vote, making Republic Senator Corker’s announcement on Friday that he would support the plan as ‘critical’, said a CNN article.
(US) House Majority Leader McCarthy (R): House to vote on tax bill on Tuesday (Dec 19th)
(US) US Senate Majority Leader McConnell (R): Senate will get tax bill ‘done’ next week (comments from Friday)
Politics: (US) President Trump’s private lawyers to meet with special counsel Robert Mueller as soon as next week – CNN; The President’s lawyers consider this an opportunity to get a clearer understanding of the next steps in Russia probe
M&A: Snyders Lance: Campbell Soup reportedly in late stage talks to buy Snyder’s-Lance; deal could be announced as soon as next week – CNBC
Equinix: To acquire Australia data center business Metronode for A$1.035B in cash
VIPS Tencent, JD.com invest $863M Equity Investment and Business Cooperation in VipShop
Europe
(UK) Chancellor of Exchequer Hammond (Fin Min): UK and China have agreed to accelerate preparations for London/Shanghai stock connect initiative
(AT) Austria People’s Party Leader Kurz and Freedom Party said to have agreed to form a govt – Austria press
(UK) Canadian ratings agency DBRS affirms UK sovereign debt rating at AAA, stable
(PT) Fitch raises Portugal sovereign rating to investment grade from junk; raises two notches to BBB from BB+; outlook Stable from Positive (from Dec 15th)
(IE) Fitch raises Ireland sovereign rating one notch to A+ from A; outlook Stable (from Dec 15th)
M&A: Gemalto: Thales agrees to pay €51/share in cash or ~€4.8B to acquire the company
Levels as of 01:00ET
Nikkei225 +1.6%, Hang Seng +0.7%; Shanghai Composite -0.1%; ASX200 +0.7%, Kospi -0.0%
Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax +0.3%; FTSE100 +0.1%
EUR 1.1765-1.1738; JPY 112.83-112.48; AUD 0.7661-0.7641;NZD 0.7017-0.6989
Feb Gold +0.1% at $1,258/oz; Feb Crude Oil +0.2% at $57.44/brl; Mar Copper -0.6% at $3.12/lb
