General Trend:
- Hong Kong equities underperform on news related to Huawei
- Nasdaq Futures underperform, in line with tech weakness in Asia
- US markets to resume on Thursday after holiday
- Arrest of Huawei CFO in Canada weighing heavily on the markets, suppliers significantly lower. Will add to friction for trade between Canada and China; China and US and could be a positive to relations between Canada and US if Canada extradites her the US for unspecified charges
- Apple supplier Largan declines over 9%, sees Dec sales lower m/m
- Chinese officials have still not offered new details on trade ‘truce’ (financial press)
- China Commerce Ministry (MOFCOM) is due to hold its weekly news briefing later on Thursday in Beijing (time not disclosed) – financial press
- China skips OMO operations for the 30th consecutive session, and again conducts 1-yr MLF for the 13th time this year
- Oil prices decline ahead of upcoming OPEC meeting
- Commodity currencies track declines in equities
- Taiwan Central Bank Gov rules out QE for now
Headlines/Economic Data
Japan
- Nikkei 225 opened -0.7%
- (JP) Japan Trade Min Motegi: Reiterates US want to reduce trade deficit with Japan
- (JP) Japan constitutional reform discussions to be delayed to 2019 – Nikkei
- (JP) Bank of Japan (BOJ) Gov Kuroda: Risks for Japan’s economy is tilted to the downside; economy is expanding gradually, negative Q3 GDP growth due to temporary factors like natural disasters; BOJ can theoretically cut short and long term rate targets, ramp up asset buying or accelerate pace of base money expansion if it needs to ease further -6178.JP President Nagato: Expect 2019 GDP around 1%; interest rates wont rise for the next couple of years; impact of BOJ tweak in July on the company has been nothing
- 9984.JP Underwriters of $23B mobile unit IPO expected to cover entire book by Wednesday
Korea
- Kospi opened -0.3%
- (KR) North Korea has “significantly” expanded a key long-range missile base while denuclearization negotiations with the United States have stalled – Press citing satellite images
- 005380.KR Refused a revised plan that removed a restriction on collective wage bargaining at a proposed plant in Gwangju – Korean press
- (KR) South Korea Oct Current Account Balance: $9.2B v $10.8B prior; Goods Balance: $11.0B v 13.2B prior
- 005930.KR To promote president/CEO of device solution (chip) unit Kim Ki-nam to Vice Chairman position – annual executive shake up; retained its leaders in its smartphone and consumer electronics divisions
- (KR) South Korea rival political parties held talks to make a breakthrough over the government’s 2019 budget bill; electoral reform emerging as a sticking point in moving their talks forward – Yonhap
- (KR) North Korea Foreign Min Ri Yong-ho to arrive in Beijing today at the invitation of his China counterpart – Korean press
China/Hong Kong
- Hang Seng opened -1.8%, Shanghai Composite -0.8%
- HUAWEI.CN Canada reportedly arrests global CFO, Deputy Chairwoman and daughter of founder, Wanzhou Meng in Vancouver on trade sanction violation suspicions in the US – Globe & Mail; Follow Up: Confirms Wanzhou Meng is detained by Canada authorities, not aware of any wrongdoing by Meng, not provided with much information so far; confirms US is seeking to extradite her
- Follow Up: China Embassy has asked Canada to free CFO Meng, resolutely opposes the arrest
- (CN) CHINA PBOC CONDUCTS CNY187.5B IN 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) V CNY403.5B PRIOR AT 3.30% V 3.30% PRIOR
- 1810.HK Accounts for 20% of wearable tech global market share in Q3, beating Apple and FitBit – SCMP citing IDC data
- (HK) Hong Kong micro flats expected to be hit the hardest on falling prices; seen -30% v the -20% to -10% expected in the overall residential market – SCMP
- (CN) China PBoC sets yuan reference rate: 6.8599 v 6.8476 prior
- (CN) China PBoC Open Market Operation (OMO): Skips open market operation v skipped prior (30th straight skip)
- (CN) China PBoC Advisor: PBoC to allow yuan to gain in trade truce – China press
- 54.HK Strength attributed to plan by Chairman to take the company private for $2.7B (+30%)
Australia/New Zealand
- ASX 200 opened -0.3%
- FCG.NZ Reports prelim Q1 EPS NZ$0.25-0.35, Rev NZ$3.8B, -4% y/y, gross margin 17% v 16.6% y/y; Cuts FY18-’19 milk price forecast to NZ$6.00-6.30/kg (prior NZ$6.25-6.50/kg)
- NUF.AU Guides FY19 earnings growth; EBITDA A$500-530M; Rev to grow y/y; Guides H1 EBITDA similar to 2018 – AGM
- (AU) AUSTRALIA OCT TRADE BALANCE (A$): 2.3B V 3.0BE (10TH CONSECUTIVE SURPLUS); Exports m/m: +1% v +1% prior; Imports m/m: +3% v -1.0% prior
- (AU) AUSTRALIA OCT RETAIL SALES M/M: 0.3% V 0.3%E (prior revised lower)
- AHY.AU Sells Australian consumer tissue division for A$180M; accretive to FY19 EBITDA (+45%)
- DNA.AU CEO Joey Lim requests leave of absence for ~3-months (-18%)
- (NZ) New Zealand sells NZ$100M v NZ$100M indicated in 2.50% Sept 2040 Inflation-Indexed Bonds, avg yield 1.7244% v 1.6952% prior, bid to cover 2.90x v 2.67x prior
Other Asia
- (TW) Taiwan Central Bank Gov Yang Chin-Long: US/China trade ware may last 1-2 years
North America
- (US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC GROWTH ‘MODEST OR MODERATE’; LABOR MARKETS TIGHTENED FURTHER
- (CA) BANK OF CANADA (BOC) LEAVES INTEREST RATE UNCHANGED AT 1.75%; AS EXPECTED
- (US) Fed Quarles (hawk; FOMC voter): No comments on monetary policy: US economy is strong, especially so in the West
- Citi [C]: CFO: may see Rev growth in branded cards in Q4; fixed income trading Rev may be lower in Q4 – GS conf comments
Europe
- OPEC delegate: some nations see a reduction of under 1M bpd as an adequate cut
- (RU) According to Russia calculations a return to 2016 oil quotas could result in cuts of 1.2M bpd – press
- (RU) Russia agrees to cut oil output in tandem with OPEC and allies in 2019; debates regarding figures and baseline for cuts still ongoing
- (FR) France Parliament votes in favor of tax announcements by 358-194 margin; Govt has now abandoned fuel tax rise
- (UK) PM May being pushed to call off Parliament vote on Brexit next week over worries that if it fails the Govt will break down – Times
- (UK) UK Government reportedly seeking compromise to avoid defeat at Dec 11th vote; to include Parliamentary Veto on Backstop – press
- (IT) Italy to send revised budget proposal to Brussels by next week – press
Levels as of 12:50ET
- Hang Seng -2.8%; Shanghai Composite -1.5%; Kospi -1.6%; Nikkei225 -2.3%; ASX 200 -0.4%
- Equity Futures: S&P500 -1.3%; Nasdaq100 -1.6%, Dax -1.5%; FTSE100 -0.8%
- EUR 1.1339-1.1352; JPY 112.58-113.24 ; AUD 0.7218-0.7274;NZD 0.6858-0.6901
- Feb Gold +0.2% at $1,244/oz; Jan Crude Oil -1.0% at $52.39/brl; Feb Copper -1.0% at $2.75/lb